Don’t confuse bonds with insurance policies. Rather than being a traditional form of insurance, bonds are a kind of contract between three or more parties designed to protect one or more of those parties, usually with regard to a temporary business agreement.
Bonds of this sort always include a client to whom a service is being provided; the individual or business performing the work in question; and the insurance provider. Bonding is designed to ensure that the contracted work will be completed even in cases when the business fails to fulfill their contractual obligation.
Types of bonding include:
- Performance Bond – Performance bonds are designed to ensure a job is completed in accordance with the terms of a contract.
- Bid Bond – Ensures that an entity bidding on a contract will provide the required payment and performance bonds if they are awarded the contract.
- Payment Bond – Makes sure suppliers and subcontractors are paid for the work they perform.
- License Bond – Ensures compliance with municipal, county, state or federal regulations. In many cases, these are required bonds.
To learn more about performances bonds and other types of bonding, contact one of our JF Murray insurance professionals today.