Bonds Quote Forms
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Meet your Contractual Obligations with a Bond
Coverage for Long Beach, San Diego and communities throughout California
If you are a contractor, then you’re bound to do a project following someone else’s stipulations. You are going to do everything you can to avoid breaking your contract.
However, sometimes things might go wrong that you can’t control. You will likely need a way to compensate your clients when you can’t complete their contracts. The right bond can help you do that.
What are Bonds?
Bonds are similar to liability insurance, but they don’t function like standard policies. Nevertheless, they still provide critical financial backing to clients if you cannot complete their stipulated work.
If you cannot complete a contract, or if you act dishonestly during the process, you fail to honor your duty to your client. You can use the payout provided by a bond to repay the client for their financial losses. Essentially, the bond promises you will either finish your work satisfactorily, or you will pay up.
Bonds involve three parties. The bond company, the principal and the obligee.
- The bond company is like an insurance company. It issues bonds, manages claims and issues payouts. You’ll pay your bond company regular premiums to keep the bond active.
- The principal is the person who carries the bond. If you’re the contractor, you are likely the principal.
- The obligee is the party that requires the bond. Essentially it is the person who obligates (requires) you to carry this coverage.
So, let’s say one of your contracts falls through. You (or in some cases the obligee) file a claim with the bond company. The bond provider then issues a payment to the obligee, much like an insurance payout. Because of stipulations like these, bonds serve as valuable financial security. They help companies guarantee they will do their work, under the obligation of paying if they don’t.
Nevertheless, there is one critical way that certain bonds differ from standard insurance. If the bond company pays a bond, you might have to repay that sum to the bond company for paying on your behalf. In other words, you still have to repay someone for your failure to deliver services. Ask your bonding agent whether this requirement comes with your bond.
The Security of the Bond
When you carry bonds, you create a lot of credibility for your business. If contracting clients see that you have a bond, they will know you have their financial security in mind. They’ll likely see your business as a more secure investment compared to un-bonded parties. In fact, bonds often provide such valuable protection that many parties won’t issue contracts to those who don’t carry them.
If you need bonding, let Green Arrow Insurance Solutions help you get covered. We can issue surety bonds, fidelity bonds to meet the needs of a diversity of clients.
Call one of our experienced agents at (310) 698-0140, or complete a bond quote online right now.