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Bonding

Is a bond the same as insurance?
No. An insurance policy is an agreement between 2 parties, yourself and the insurance company. You pay the insurance company a premium for your policy. If you have a valid claim, the insurance company repays you for the amount of the loss as agreed to in the policy. A bond is different from insurance because it is an agreement between 3 parties. They are: the PRINCIPAL (the person or entity named on the bond), the Surety Company (the company issuing the bond), and the OBLIGEE (whose interest are being protected by the bond). When there is a claim on a bond, and it's determined to be valid, the PRINCIPAL responsible for re-paying the SURETY COMPANY for their losses.

Who does my bond protect?
A bond protects the OBLIGEE or BENEFICIARY named on the bond. If your bond is for a license or permit that is issued by the State of California such as a Contractor, Insurance Broker, Notary Public or Tax Preparer to name a few, then your Bond protects the State of California in the event of a claim.

Is it hard to get a bond?
That depends on several factors. First, it is the amount of risk associated with the type of Bond you need. The risk factor is based on the past record of claims paid on particular bond. For example, a $5,000.00 License/Permit Bond could be harder to get than a $15,000.00 License/Permit Bond because if the smaller Bond is considered to be a higher risk. On the other hand, Bonds that are in a "low-risk" category with little or no past record of claims, the requirements become more relaxed.

Obviously, with riskier Bonds such as Contract/Performance Bonds, it will be harder to qualify. Being approved for a Bond is in many ways like qualifying for a loan. Employment history, credit rating, personal assets, and your experience in relationship to whatever the bond is intending to guarantee are all factors the underwriter looks at when determining whether or not to issue a bond. This qualifying process is more common with Performance Bonds that are frequently used in the construction industry.

There are some marks on my credit report that aren't so good, and some that shouldn't be there but are still showing up on my report. Will I be able to get a bond?
It depends on what the items are, and what the circumstances are. If you know there will be something on your credit report that shouldn't be there, and you have proof the item is incorrect, a written statement from you and the supporting documents should be submitted with your application. Errors on credit reports are fairly common, as we all know, and usually can be cleared up with minimal effort.

I am a Licensed Contractor and my current Bond Company has declined to renew my Bond. Can you help me?
In most cases, yes. As long as there hasn't been a substantial claim on your current bond that hasn't been settled, and there are no liens file against you, we should be able to get you a new bond the same day.

I'm thinking of starting my own House Cleaning, Pet/House Sitting, or Janitorial Service business and want to be able to advertise that I'm Bonded. Is it possible to be Bonded if I am the owner and only employee?
Yes, upon approval of the underwriter. Both large and small service companies that have their employees going into clients' homes need protection from dishonest acts committed by employees. When you are the owner/employee Employee Dishonesty Bonds are a valuable marketing tool that can increase your business and give your clients peace of mind.

Employee Dishonesty coverage can be written for $2,500 to $100,00 and can be written to cover whatever number of employees you have. This type of bond can be written for non-profit organizations to protect their funds.

NOTE ON EMPLOYEE DISHONESTY BONDS:
Employee Dishonesty Bonds have an Arrest and Conviction Clause. This means no claim will be paid unless the accused has been arrested and convicted of the crime. This is to protect yourself and the Surety Company against fraudulent claims. These bonds do not cover any kind of breakage or damage to your clients' property by your employees. You would need Commercial Liability Insurance for that. We also provide Commercial Liability Insurance - let us know if you would like a quote for your business insurance.

How do you get a bond?

Request a quote or contact us.

 

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