Contract Bonds are often used in the construction industry. They ensure that the terms of a contract are performed. A general contractor or sub contractor is often required to purchase a performance bond that ensures completion of a project. Project owners and larger subcontractors will often purchase payment bonds to ensure suppliers and sub contractors are compensated. Other common types of contract bonds include maintenance bonds, bid bonds and supply bonds.
A Commercial Bond is a general classification for all bonds except the aforementioned Contract Bond. It can be used to secure a permit or license. Commercial Bonds are also commonly required to sell vehicles, real estate, or contracting services, or to ensure payment of taxes. Court Bonds also fall under the commercial bond category.
Surety Bonds are also used in business contracts, requiring one party to properly perform a fiduciary responsibility to another. These are also called fidelity bonds. One of the most common examples is an ERISA bond, which is required for administrators of employee retirement plans.
Does Your Business Have Insurance Bonds Coverage?
Insurance bonds are generally known as Surety Bonds and are classified as either a “contract bond” or “commercial bond”.
A Contract Bond is an agreement between three parties:
– The “principal” or business which is performing a contractual obligation,
– The “obligee” or business to which the obligation is owed, and
– The “surety” or business that ensures that the principal’s obligations will be performed.
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Businesses of all types need for property insurance, but not all policies provide coverage for the hazards that threaten your unique business. Do you know if your current policy requires you to value your property with one of the above mentioned valuation methods? In many cases, if your policy has a coverage limit that is less than 80% of the accurate value, you could end up receiving far less than you would expect at the time of a loss (coinsurance clause). As a prudent business owner, we welcome you to a free personal consultation with one of our specialist insurance agents. Your agent will learn about your business, discuss your concerns, and identify the risks that could impact your particular business. Boynton Insurance Group will help guide you to an insurance carrier with a program specifically for your type of business, and an agent will help you customize your insurance coverage to best protect your company from major property loss and business interuption.