You might be amazed at just how often you’ve been protected by a surety bond. Have you ever bought a home? Purchased a car? Hired a contractor for repair services? Have you ever gone out to a bar or club with friends? If so, a surety bond has been in place to protect you. These bonds exist under every state’s licensing laws to protect everyone involved in a business practice. They serve to defend against unethical and improper business practices.
But what exactly is a surety bond, and how does it serve to protect you? Read about what surety bonds are, how they work, and how surety bonds protect customers while ensuring that businesses live up to their obligations.
What Are Surety Bonds?
Surety bonds are often confused with insurance policies, but in truth they’re not insurance at all. They put a great deal more responsibility on the business owner who takes out the bond than an insurance policy does. With insurance, if something goes wrong, the insurance company nominally pays out damages, and that’s the end of it.
With a surety bond, on the other hand, when something goes wrong, specifically related to the bonded business not living up to their obligations, the bond extends a loan or line of credit to cover the damages. The business is then on the hook to repay this bond.
How a Bond Protects Customers
Much like insurance, a bond allows customers to get compensated when their dealings with a business go sour, usually due to the business engaging in unethical activities or failing to live up to their responsibilities. If, for example, you buy a car which is not as described when the dealer delivers it, you can file a claim against their bond. If you hire a contractor to do home improvements on your house and the work isn’t completed or is faulty, you can file a claim against their bond.
The idea behind a bond is to hold a business to their responsibility to behave ethically and finish what they start. They ensure that you will get the product or service for which you contracted, or at least that you get compensated if the business doesn’t deliver and doesn’t reimburse you for the losses you suffer.
Bonds Protect Businesses
Bonds protect businesses. Even though they might seem like a headache and an extra unnecessary expense, they create a level of trust with customers that you don’t get if you aren’t licensed and bonded. They also provide a layer of regulation to help prevent unethical operations. Businesses who routinely fall back on bonds tend not to stay in business for very long. The process, in the end, isn’t nearly as difficult as you might think, but that can come down to the bonding agency you choose.
National Surety Services, Inc., has been in business for over 25 years, protecting customers and businesses with the very best in surety bonding services. We believe in a simple, straightforward process for your contract, payment, bid, performance and other bonds. For more information about getting your business licensed and bonded, get in touch with us today!