Bonds Overview: What Your Business Needs to Know 

Understanding the role of bonds is essential for business owners and contractors looking to make sure their operations are compliant and positioned to establish and build strong relationships with clients. At First Priority Insurance Agency , we have ample knowledge regarding these essential loss control measures and can work with your company to make sure you’re suitably covered.

What Are Bonds and Why Do They Matter?

Bonds may also be known as bonds insurance and surety bonds. Regardless of terminology, they typically act as a type of financial guarantee that protects against losses caused by a business’s failure to meet certain obligations. As is the case in many states, in Georgia, bonds are commonly required for contractors, professionals and businesses in certain industries.

Once retained, the right bonds can help make sure that projects are completed as promised and that clients are protected from potential financial harm for which your business might be at fault. In many cases, state laws, local ordinances and industry regulations may mandate certain types of bonds. Similarly, many clients may require your business to be bonded before agreeing to work with you.

How Do They Work?

Bonds typically entail an agreement between a trio of parties:

• The principal, such as your business, is responsible for purchasing bonds
• The obligee, such as a client or regulatory agency, determines if bonds are necessary
• The surety, such as an insurance company, underwrites and maintains bonds purchased by the principal

In the event that the principal reneges on their obligations, the obligee can be reimbursed for losses through these bonds. This can allow the latter to feel financially secure and potentially recoup damages without requiring legal action.

How to Find the Right Bonds

Whether you’re new to bonds or looking to renew your coverage, we’re here to guide you every step of the way. Contact us today to discuss your bond-related needs with our experienced team.

This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information.