Bond FAQs

What is the difference between a surety bond and insurance?

Surety bonds are used in numerous industries to make them safer. Bonds exist to safeguard the interests of the general public and the authorities that regulate different trades.

It’s easy to mistakenly think surety bonds are like insurance because the terms “surety bonds” and “surety bond insurance” are both used to describe bonding. However, these two forms of security serve different purposes.
You and other insured entities contribute insurance premiums on a regular basis. The insurance company will offer you compensation if you incur any losses that are covered by the insurance. Insurance companies protect you by mitigating the risks you face in return for regular payments.

Surety bonds work differently. You are required to use surety bonds to guarantee your honesty, performance, and that you abide by the rules, laws, and regulations that govern your industry. Instead of protecting you, they protect parties affected by your business, such as clients, subcontractors, or the state.

You pay premiums on your bond. If you fail to fulfill your obligations, you might get a claim on your bond. With bonds, the premium covers the underwriting and pre-qualification services costs. Thus, the entire risk stays with you as the principal. It is your responsibility to repay affected parties when a claim brought against you is proven. As a bonded company, you send a powerful sign to your customers and relevant that you are a trusted and safe company to do business with. It boosts your business reputation and sends a powerful message in marketing your company.

What is a surety bond?

A surety bond is an agreement between three parties: Principal, Surety and Obligee and acts as a risk transfer mechanism. The surety constitutes a financial guarantee to the obligee (the government, for example) that the principal (a business owner) will fulfill their obligations.

Surety bonds guarantee contractors will execute all the responsibilities outlined in the contract. If the contractor doesn’t do this, the surety will pay the oblige to get the job done and cover damages. The contractor is then required to pay the surety back.

What is a business service/janitorial bond?

These are designed specifically for cleaning services businesses. They mitigate the risk of employees stealing from their employers.

What is a car wash bond?

These required bonds ensure that car wash employees receive all earned wages, interest, and fringe benefits promptly.

What is a contractor license bond $15,000?

Contractor License Bonds are required by most states to guarantee that the general contractor will operate their business in compliance with the rules and regulations of their specific contractor license. These bonds exist to protect the public from fraudulent practices or from being ripped off by a contractor.

How do defective title – floating home, mobile camper, commercial coach, and mobile home bonds work?

This type of bond is required by the CA Department of Housing & Community Development to provide proof of ownership.

How do defective title/certificate of title $100-25,000 bonds work?

The motor vehicle title bond is required to register or transfer a vehicle when evidence of ownership is not available. It is commonly used when the original vehicle title has been lost, misplaced, destroyed, or was not received by the buyer.

How do employment agency bonds function?

Employment agencies must post surety bonds to conduct business legally. The surety bond guarantees that the agency will meet state licensing and compliance

What is E.R.I.S.A?

An ERISA fidelity bond is a type of insurance that protects the plan against losses caused by acts of fraud or dishonesty. … The fidelity bond required under ERISA specifically ensures a plan against losses due to fraud or dishonesty (e.g., theft) by persons who handle plan funds or property.

Do I need to be bonded if I am an escrow agent?

California Escrow Agencies are required under the Financial Code Section 17202 to file a California Escrow Agent Surety Bond as a condition of licensure.

Do I need a guide license $1,000?

The California Fish and Game Code Section 2541 requires that all those who are applying for a California Fish and Game Guide License execute a California Fish and Game Guide License Agent Bond, also known as a California Outfitters Guide Surety Bond, in the amount of $1,000.

What is an ICC broker bond / $75,000?

The BMC-84 surety bond is required of freight brokers and freight forwarders to help ensure payment to motor carriers in the event your business fails to comply with the items listed in your contract. The bond is required by the Federal Motor Carrier Safety Administration. Both freight brokers and freight forwarders are required to provide the BMC-84 surety bond.

What is an insurance adjuster $2,000 bond?

An Insurance Adjuster Surety Bond is a license and permits surety bond required by some state departments of insurance to have an adjuster license. An Insurance adjuster is someone who investigates insurance claims or claims for damages and recommends an effective settlement.

Why is an insurance broker $10,000 bond required?

The California Bond of Insurance Broker is required by the California Department of Insurance for any entity wishing to operate as a Personal Lines Broker-Agent (also known as an Insurance Broker).

How much do I need to be bonded if I am a legal document assistant?

A legal document preparer is a non-lawyer authorized to assist with the preparation of legal instruments. California requires that legal document assistants obtain a surety bond for $25,000 to be registered. The legal document assistant bond is typically written for a two-year term. The CA Legal Document Assistant bond states that the LDA should only complete documents in the person’s specific direction.

Do I need a bond for a lost note/trust deed?

A surety bond for a Lost Trust Deed is a bond required by banks or other financial instrument transfer agents. A trust deed is usually recorded with the recorder or county clerk for the county where the property is located as evidence of and security for the debt.

What is a Medicare bond?

Most suppliers of durable medical equipment, prosthetics, orthotics and supplies (DMEPOS) must file a $50,000 surety bond before they can bill Medicare. Because DMEPOS bonds are required by CMS, they are also known as “Medicare Bonds” or “Medicaid Bonds.”

What is a motor vehicle registration service $25,000 bond?

A registration service is an individual or business that registers vehicles with the state departments of motor vehicles on behalf of consumers. The bond guarantees the consumer that the registration service will register their car, pay any fees due and do so in compliance with all applicable laws and statutes.

Are notary public surety bonds required?

California Notaries are required by California law to purchase and maintain a $15,000 Notary surety bond for their entire 4-year term of office. The Notary bond protects the California public against financial loss due to improper conduct by a California Notary. The Notary bond is not insurance protection for California Notaries.

Are pawn shops required to purchase bonds?

A Pawnbroker Bond is a license and permits surety bond required as part of the state or local business licensing process to operate a pawn shop legally.

What is the California Photocopier Bond?

The California Photocopier Bond is required of all businesses that provide the service of photocopying records for insurance companies, attorneys, or any service that photocopies and can access the information they are photocopying. The bond is regulated by the County Clerk’s office in the county where the records are kept. The bond’s obligation is for the professional photocopiers integrity and confidentiality in the operation of the service being provided. It protects the photocopier clients and the public from the spread of confidential information.

Am I required to post surety for a talent agency?

The California Department of Industrial Relations Division of Labor Standards Enforcement Licensing and Registration Unit requires talent agencies and fee-related talent services to post $50,000 surety bonds.

I am a tax preparer. Do I need to be bonded?

Tax Preparers are required by the state of California to possess a California Tax Preparer Surety Bond for $5,000 before you can be licensed as a California Registered Tax Preparer.

Do I need to be bonded if I use large amounts of electricity?

A utility bond is a type of financial guarantee ensuring a person or organization will pay for utilities on time. Most utility companies require customers with high utility usage to be bonded before utility services are turned on.

What is the California Vehicle Verifier Surety Bond?

The California Vehicle Verifier Surety Bond is required by the California Department of Motor Vehicles.