What is an Indemnity Bond?
Indemnity bonds guarantee to indemnify and reimburse anyone that may experience financial loss due to the principals (the individual with the bond) poor conduct. The surety bond is used by governments, businesses and individuals as an agreement contract for compensation.
For example, if you don't abide by the laws of your state and cause financial harm to a client, a claim can be filed on your bond. The claim will initially be paid by the surety who wrote your bond, but will ultimately come back to you for reimbursement.
If you're unsure whether you need a bond, you can select your state from the list below to view the bond requirements.
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Types of Indemnity Bonds
Indemnity bonds come in different forms, from residential real estate agreements to exclusive product contracts. Understanding the different types of business contacts can help ensure that you're aware of the guidelines and legal regulations surrounding the agreement with another party.
A commercial contract is a legal document that makes one party responsible for a specific action, or refraining from an activity.
Leases are legally binding contracts that require the lessee to pay the lessor for vehicles, buildings, property, or other products and services.
A legal contract holds both parties responsible for completing specific actions such as exchanging goods and services. Both parties agree to uphold the set agreement, which is legally bound by the law.
Licensing agreements are an agreement between the licensor (owner) and the licensee (renter) in which the licensee is granted permission to utilize property, goods, or services under specific guidelines set by the licensor.
A loan agreement is a binding contract between the borrower and a lender that holds both parties responsible for upholding the terms of the agreement.
Supply agreements are contracts between suppliers and buyers that agree to exclusively do business with one another, buying and selling goods at a set price.
An indemnity agreement is a promise between two parties, the indemnitee (buyer) and the indemnifier (offerer). Should any injuries or losses occur to the indemnitee, the indemnifier agrees to protect and compensate for those losses.
For example, if a construction worker (indemnity) is injured on the job, the insurance company (indemnifier) would cover the cost of the medical bills, based on the premiums paid for by the construction worker.
If the construction worker signs an indemnity agreement with his/her company, then the company would not be held liable but ensures that the injury (medical bills) is compensated.
What Do Indemnity Broker Bonds Cost?
These bonds generally cost between 1-15% of the requirement bond amount. The percentage you must pay is based on your financial strength, e.g. personal credit, business financials, etc. If you're ready, get a free quote for your bond today. You can also take a look at the most frequent surety bond related questions here.