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 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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