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Bond Insurance in Texas and New Mexico
Clients likely want the guarantee that a business has their personal and financial interests at heart. By carrying bonds, business owners can prove they have the resources to assist clients in case problems arise. Let Pan American Insurance help you get the appropriate bonding for your commercial needs.
Businesses, Bonds and Customer Service Guarantees
In your line of work, you want to do your job to the best of your ability. After all, if something fails, it’s not just you, but also your clients who might suffer. If they do, they might want you to cover their losses.
To ensure the business will take responsibility for its mistakes, many clients will require contractors or other service providers to carry various types of bonds, namely surety bonds. Bonds will promise settlements to clients in case your work causes them a financial or personal loss.
However, unlike insurance, bonds don’t protect businesses from having to pay for the client’s lost costs. The bond simply guarantees that the bond holder has the assets available to pay for these losses.
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How Bonds Work
Perhaps you fail to complete a project for which you are under contract. As a result, the client could face their own challenges and losses. Therefore, you might have to compensate them. Bonding will provide the guarantee that you can do so.
Most bonds involve three parties:
- The Surety: The company that issues the bond. You pay premiums to the surety company.
- Principals: The business or party that carries the bond.
- Obligees: Those who will receive the bond’s payout.
If a loss occurs, the obligee can make a claim against the bond. The principal will then have an obligation to pay obligee for the claim. The surety will usually provide the money to help them do so. The catch, however, is that the bond payout does not let the principal off the hook for the money. The principal must repay the surety because the surety paid on the principal’s behalf.
You might think of a bond in the same way you would a credit card. If you buy something on the card, the seller will receive payment through the credit company. However, you have to eventually make a credit card payment to the creditor. Bonds work much in the same way. You must have the resources to compensate the surety for paying on your behalf.
Our Bond Offerings
Pan American Insurance proudly offers a diversity of bond options, including:
- Contractor License Bonds
- License & Permit Bonds
- Notary Bonds
Our agents are happy to help you get the appropriate bond options for your operational needs.
What are the Costs?
Your surety company will determine the limits they will provide you based on your company’s bonding capacity. That reflects your ability to repay them.
For example, you might carry a bond with a $1 million single limit and a $5 million aggregate limit. A single bond, on a single job, will provide only $1 million for a total claim. However, the total amount of bonds you carry, cumulatively, however, can total no more than $5 million. Depending on the way you structure your bond, your premiums will vary.
If you need assistance choosing the most-appropriate bond options for you and your business, let Pan American Insurance’s expert agents help. Call us at (833) 775-2355 or request a quote online right now!