What Are Fidelity & Surety Bonds?
Fidelity and surety bonds are used to protect against loss and to manage risk in a variety of commercial transactions, and are often required by law in order to engage in certain business activities.
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Fidelity Bonds
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Fidelity bonds are similar to insurance policies because they are used to compensate for losses that occur because of dishonesty, such as misuse of a notary stamp.
Surety Bonds
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Surety bonds are contracts used to provide assurance to one party, usually a government agency, that another party, such as a general contractor, will perform the terms of a project contract.
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Qualifying for a Bond
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Fidelity and surety companies will evaluate an applicant's suitability for a bond by a careful review of the applicant's financial condition, and by conducting a background check for prior acts of dishonesty.
Bond Amounts
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Bond amounts are usually set by law, such as $5,000 for a notary's license bond or $10,000 for a contractor's license bond.
Benefits
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The ability to obtain a bond is good for your business, and can increase your the scope of your business opportunities.
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References
- Photo Credit Image by Flickr.com, courtesy of Pawel Loj
