Does surety bond insurance protect you?
Transcript: Does Surety Bond Insurance Protect You?
Man: I'm told by the government that I need to get bonded for my business. Is the surety bond going to protect my business?
JW: I'm glad you asked. It's a common misconception that surety bonds are a form of insurance that protect you. The bond is actually in place as a form of insurance to protect the government and it's citizens, not you. As the business getting bonded, the bond is actually a form of credit for you, not insurance.
Man: Credit? What do you mean?
JW: If there is a legitimate claim, the bonding company may pay it at first, but you are required to reimburse them. Therefore, it's a form of credit to you.
Man: So why is it called "business bonding insurance"?
JW: The terminology "insurance bonds" and "security bond" are generally used by the public, not by surety experts. There are bonds available called fidelity bonds that actually do insure your business from employee theft, which is likely where the confusion originates from.
Man: So is it possible for me to get the surety bond the government is requiring of me and a fidelity bond to insure against theft?
JW: Absolutely. A surety bond can only be obtained if it is required of you. However, a fidelity bond is strictly an insurance policy that you can obtain if you choose to.
Man: That makes a lot of sense. Thanks for clarifying! Now I just need to know where to get my bond from.
JW:Then you're going to want to join me for our next video, "How To Choose A Surety Bonding Company".
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