Thinking of making the switch? Here are a few things to think about with regards to surety bonds. Surety bond programs might be one of the most misunderstood types of contractual payments out there. We discussed the 7 things you should know about surety bond programs, so you can decide whether or not they are right for you.
Things to know about Surety Bond Program
Before you commit to tying yourself up in a surety bond program, let’s review the things you should keep in mind at the point of purchase.
1 – The Obligee is Protected
With certain types of surety bonds, the obligee ought to be covered against failure on behalf of the other party. The Talisman Casualty surety bond program protects the obligee against losses and failures, meaning you have minimal risk on your investments.
2 – Bond Program is Personal
In the surety bond industry, capital is exchanged as a promise that ensures the one seeking the bond, fulfills their end of the contract. Often, these are used as a way to help out a loved one, avoid prison, or borrow large sums of money. Working with a cell captive insurer allows for an even greater personalization of the experience, since cells are small with limited members.
3 – There’s Barely Any Risk
When you take out the type of surety bond that protects the obligee, then you minimize the risk to that person. Since that person is the one fronting the capital, they are better off financially, should something go wrong. On the other hand, if you are the person seeking the bond, then some degree of risk is involved.
4 – Types of Bonds
There are different types of surety bonds. The most commonly encountered are the Payment and Performance bond, the Compliance and Licensing Bond, and Court and Legal bonds. These allow your firm to place money against minimal risk situations, where the outcome is carefully managed.
5 – Surety Is Not Actually Insurance
Although used in place of insurance, surety bonds aren’t actually an insurance type themselves. Instead, they are a way of underwriting risks that don’t involve whole policies. This makes them better suited to helping the individual or SME seek funding help without being tied up in masses of paperwork.
6 – Bonds Are Used When We Don’t Expect to Lose Out
Why do businesses use surety bonds? It is considered that the risk undertaken is so minimal, that the business or investor does not expect that there will be any losses. It is a quick, beneficial way to operate with an insurance subsidiary that means you don’t need to take on all manner of policies to stay operational.
7 – Surety Bonds Are Used Across Many Different Industries
They’re not just for getting people out of jail… a surety bond can be used in construction, to underwrite contracts in trades, and even to support transactions in the finance sector. Surety bonds are a unique alternative to insurance, that might just be the answer you have been looking for.