Bonds in Bountiful, UT
As a business, there may be times when other parties are financially dependent on you delivering reliable and timely goods and services. Your clients, customers and partners may have significant stakes in your operations going smoothly, and accidents or errors could have devastating ramifications for all parties involved. With this in mind, you may need to invest in loss control measures that can protect other parties’ financial interests, such as bonds.
How Do Bonds Work?
Bonds are financial instruments usually purchased from insurance companies. By acquiring and maintaining bonds, you can provide your clients and customers with financial reassurance that even if you cannot deliver on promised goods and services, they will have a means of recouping financial losses. In many cases, your organization may be required to purchase bonds to be eligible for certain jobs and projects.
What Types of Bonds Are There?
There are many types of bonds, and the right choices for your specific circumstances may vary significantly. It can be helpful to familiarize yourself with some of the more common types of bonds, such as the following:
- Surety bonds—These arrangements typically establish an agreement between the following three parties:
- The principal (e.g., a business or contractor) purchases surety bonds if required to do so by the obligee.
- The obligee (e.g., a property owner or developer) determines if surety bonds are necessary to secure their financial interests.
- The surety (e.g., an insurance company) underwrites surety bonds purchased by the principal.
Generally, if a principal does not deliver agreed-on products or services, the obligee can recoup their losses through purchased surety bonds. At this point, the surety may seek compensation from the principal.
- Fidelity bonds—Also known as honesty bonds, these products can provide financial security and peace of mind for clients regarding potential criminal or fraudulent acts committed by your employees. These bonds can typically provide financial assistance in response to the following incidents:
- Fraudulent transactions
- Illicit fund transfers
- Property damage
We’re Here to Help
With extensive knowledge and experience working with businesses in the Bountiful area, the dedicated staff at Axcess Insurance is well-equipped to help your business understand and secure optimal bonds. Visit our website or call 801-295-0754 to learn more.