When you make a promise or give someone your word, you’re making a bond. You live by your word and do what you say you will. Unfortunately, too many people in this world don’t. It’s not enough to shake hands or even write a contract anymore. The agencies and companies you do business with want something stronger.
They want a surety bond. This bond is a guarantee from an outside insurance agency that you’re going to do the job, get it done on time, do it right, and follow the rules. And if not, they’ll be compensated in some way.
Surety bonds are often required by contractors bidding on government contracts, but not always. Companies, large and small, may require their contractors and subcontractors to be both licensed and bonded as part of the selection process. It may sound like an extra hoop to jump through to land the client, but it’s an easy way to give the decision-makers peace of mind.
Depending on the work you do and the requirements for the job, there are multiple types of bonds to choose from:
- Contract bonds guarantee that you, the contractor, will keep to the terms of the contract between you and the client.
- Commercial bonds reassure the organization hiring that you’ll follow all government rules and regulations while doing the job and as you work with that organization.
- Court bonds keep everyone protected from any losses in a court decision from a lawsuit brought against you, the project, and/or the client.
- Fidelity bonds protect against employee theft. You try to hire the best people, but it only takes one person to ruin your reputation and your business.
General contractors, builders, and those who work in the construction business most often need surety bonds for their work. But other industries benefit from having their word backed by bonds, too. If you’re writing contracts, guaranteeing work, promising delivery of a finished product, or involved in an industry that works with the government, bond insurance will protect your business reputation and help you land more contracts.