Business insurance has many components. You can choose from everything from product liability insurance and professional liability insurance to cyber crime insurance. But an additional component is the ability to get bonds.
What is the difference between surety bonds and fidelity bonds?
Bonds are a form of insurance that can be used to protect against losses and damages. One of the best ways to manage risk against your company is definitely to invest in these types of bonds. In some cases, bonds are even required to do business with another company. Other times, companies can choose to get bonds if they are worried about the possible risk.
There are two major kinds of bonds available to those purchasing business insurance. The first type is a surety bond, which helps protects a businesses’ losses. It involves a surety promising to pay one party a certain amount of money should a separate party fail to complete an outlined obligation, protecting the first party from taking the loss.
There is usually a credit check involved since payment would involve paying for non-performance. Surety bonds can be specific, but there are many categories they might fall under. While there are some uncategorized bonds, most are commercial, contract or oil/gas/energy bonds.
On the other hand, fidelity bonds cover losses caused by dishonest employees—mainly fraud and negligence. They can apply to a specific person or place, or can be apply overall. They typically deal with commercial or financial issues, but they also serve as a way to enforce honesty within the company or with a specific employee.
Bonds are a lesser-known aspect of business insurance, but can be very important to protect your company against losses. While there are both surety and fidelity bonds, consulting an insurance broker from Peter Green Insurance can help you determine the right path for your company. For more information, call Peter Green at (714) 258-2800 today.