THURSDAY, OCTOBER 29, 2020
All businesses need insurance because of the protection it can provide them. However, they also have a duty to promise their customers that they will do their jobs appropriately. One of the critical pieces of assurance that guarantees that you will provide this coverage (or else, pay up) is a surety bond. This is not insurance, but it functions as security for your business in more ways than one.
Many businesses wonder what the benefit is of having a bond. The simple answer is stability and reputational management. Bonds promise that you will meet your obligations to your customers, and therefore go a long way towards shoring up your ability to respond your customer needs.
Consider three of the primary benefits of these important investments:
1. It Helps You Win Customers
A bond is a guarantee of compensation that essentially promises that you will deliver on promises to certain customers or else you will compensate them.
Unlike an insurance policy, a bond does not free you from liability for problems with customers. Instead, it just says that if you fail in your duties, you will pay remittance to the customer. Once a bond pays a settlement to your employer, you will have to repay the bond company for their losses.
However, the benefit of this bond is that it acts as proof that you can compensate the customer. Therefore, many prospective customers will require you to have certain bonds before you can bid on or receive contracts. Many government contractors will only work with bonded businesses, for example. By buying the appropriate bonds, you’ll make the business much more competitive.
2. Your Industry Requires It
Because of the importance of bonds, numerous state and industry regulators require that certain businesses buy certain bonds. Otherwise, the business might not be able to operate. Therefore, your whole key to success might depend on your ability to procure a bond.
Some of the industries that require bonds include car dealerships, janitorial services, freight brokers, contractors, real estate agencies and countless other businesses.
3. It Helps You Stabilize Your Business
Certain bonds can assist the business in ways that a traditional insurance policy might not. For example, a fidelity bond can provide you with protection in case one of your employees steals from a customer or from the business itself. Therefore, the coverage will offer you protection for your own losses, in addition to the losses of others.
Overall, the appropriate surety bonds will provide you with ample protection from complicated losses that might afflict customers. In the end, this benefit can offer your business a big boost to its reputation in ways that will make it a leading competitor in the industry.
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