Category: Insurance

As a business owner, you have probably purchased worker’s compensation insurance, general liability insurance, cyber insurance, and any other type of commercial insurance that your business needs. However, have you thought of purchasing bond insurance or surety bonds? If this is something new to you, Birdsong Agency Inc. of Snellville, GA breaks down the bond insurance for you.

Definition of Bond Insurance

A surety bond is an agreement or contract between three parties, including the principal (the individual buying the bond), the surety (the company writing the bond), and the obligee (the department that requires the bond). A surety bond is not bought to cover claims. Instead, it provides a financial guarantee or stability to the organization or entity buying it.  

How Does Insurance Bond Work?

A surety bond is like a type of insurance. If a business owner fails to meet the requirements of a bond, like failing to pay a vendor, a claim might be filed against that bond. You can think of an insurance bond as a type of credit to the principal.

Which Insurance Bond Do You Need?

Because businesses have different needs, then it is only reasonable that each will need a different type of bond. However, there are three types of surety bonds you may require when undertaking business.

• License and permit bonds- Some professionals may require these types of bonds to operate legally. For instance, freight brokers, licensed contractors, and auto dealers are a few examples of professionals that may require a license and a permit bond.
• Contractor bonds- Businesses or individuals that work on public construction projects are likely to need a contractor bond.
• Court Bonds- Certain courts may require these bonds for different reasons.

Like most people, business owners in Snellville, GA may find it hard to determine which type of bond they need. If you are in this predicament, contact Birdsong Agency Inc., where we can help you choose a bond that will protect your business’s interests.

It’s important to understand what bond insurance is and how it works if you need a policy in Snellville, GA. We provide bonds insurance at Birdsong Agency Inc.

The following are three things you need to know about bond insurance. 

Bonds insurance guarantees repayment. 

The number one function of bond insurance is to secure bonds. When it comes to bonds, bond insurance guarantees repayment of the principle. This means that bond insurance is set up to protect those who borrow and give them greater financial security. 

Bonds insurance prevents the default of borrowers by ensuring that the principle will be repaid. 

Some policies also guarantee repayment of interest.

Bonds insurance doesn’t only guarantee repayment of the principle. Bonds insurance policies can vary in terms of what types of coverage they include. There are added coverage types for those for whom coverage for repayment of the principle may not be enough. 

Some bond insurance policies can offer even more coverage. Some bond insurance policies will also provide a guarantee for repayment of interest in addition to repayment of the principle. 

Bonds insurance is typical when it comes to asset-backed securities or municipal bonds. 

Bonds insurance is associated with certain types of financial exchanges. While bond insurance policies can vary, they are generally associated with the issuance of municipal bonds and asset-back securities in particular. Bonds insurance will most commonly be seen and offered with these types of financial agreements. 

We’re here to help you at Birdsong Agency Inc. if you have more questions about bonds insurance in Snellville, GA. Get in touch with us today to inquire about our policies and learn more about bond insurance.