Why A Surety Bond Is So Important

April 1, 2010

Surety bonds are a very important addition to any business, because they are a form of guarantee to the consumer, therefore functioning as a added layer of security and comfort they can enjoy in doing business with you. Especially in an economy like this one we are in, surety bonds add a layer of stability that few are accustomed to.

For the uninformed, surety bonds are instruments of security designed to ensure fulfillment from one part to another by a third, independent party. Functioning as aspects of credit and insurance simultaneously, they make sure that everyone is happy at the end of a contract or purchase process. Really, when you get down to brass tacks, it is more for the customer than it is for the business. The only positive aspect the business gets out of the deal is to be able to advertise that they have surety bond or bonds in place, so that the customer, again, has that extra layer of security in dealing with that particular business.

Now, if you are a customer, what do you need to know if you are looking at a purchase? What does a surety bond mean? What does it mean if a company advertises that they are “bonded”? Well, that is an important question, because many customers, and even some business owners, confuse “insured” with “bonded”. Of course, there are probably those out there for whom it is no confusion at all, but rather deception, but we are looking past that for the purposes of today. The prime difference between being insured and being bonded is the scope. You, the client, are insured against damage if anything goes wrong; a ladder falls and breaks your window, dents your car, etc… That is insurance. Bonds, and in this case surety bonds, are specifically targeted to a performance of a contractually obligated task, and it must be performed to a standard that is widely accepted in that industry.

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Filed Under Business Tips