Business is built on trust. There are times where Ontario businesses need more than their word and a handshake to win a contract. You need to provide clients with a guarantee.
Bond insurance and surety bonds provide this guarantee. They prove you are legitimate and committed to meeting your obligations to customers, suppliers, and business partners.
At ThinkInsure, we’ll help you find the right bond for your business needs and help you thrive. Answer a few questions about your needs. We’ll provide you with bond insurance quotes and options to serve you best. Here you will learn :
A surety bond protects your clients and suppliers against loss if your business fails to meet defined obligations. You have coverage for loss up to the limit of the bond. Losses paid are fully recoverable from you.
The two most common forms are commercial surety and contract surety. Surety bonds can also be known as a contractors bond or construction bond. Some companies require businesses to secure a surety bond as part of the business contract.
A surety provides your client and business partners with additional protection and reassurance.
Bond insurance, also referred to as bonding insurance, is a form of coverage offered by insurers to businesses. A bond acts as a form of insurance to protect your business against potential loss. Risks include employee incompetence, theft, or internal fraud.
You or your employees could make a mistake. It could end up resulting in a loss for your clients. With a bond, the damages will be paid by your insurer.
Contract and fidelity bonds are most common. Many bonds are industry and business activity specific. Bonds give your customers peace of mind in knowing you are a credible company.
By law, some businesses must purchase bonding insurance due to the nature of their business or industry. Make sure you are aware of your business licencing and bonding requirements. Others purchase bonds to increase company credibility.
There are a number of reasons why bond insurance or a surety bond may be ideal for your Ontario business :
A surety bond involves 3 parties :
Surety bonds are available and used by many companies. Here are the industries where this is most common :
It’s common to see businesses list “bonded and insured” on their website and in ads. Companies that are bonded and insured have a business license. They have commercial insurance coverage and have secured a surety bond. If they fail to meet project expectations, you, as the client, have coverage for a financial loss.
Getting a bond for your business is similar to shopping for business insurance. Follow these steps :
Applying for a surety bond follows a very similar process as getting bonded and insurance. Work with a broker to compare your surety bond options. Choose a bond that makes sense for your company and your business objectives.
Bonding insurance provides an added layer of protection for your business against internal threats. Bond insurance protects your business against :
As a business, it’s important to reduce risk and threats that exist for your business. A strong business insurance policy does this.
Bonding may or may not be a requirement by your local or provincial government to get a business license. It is something you should consider to provide your business with additional protection.
Surety bond costs are variable. Insurers base costs on your level of risk of not meeting your obligations. They also consider the amount of surety bond you need, and the odds of you filing a claim. Costs are set as a percentage of the total cost of the surety.
To determine costs, you need to get a quote from a surety bond provider.
The average cost of a surety bond can be from 1% to 15% of the bond cost. The percentage you pay is based on your financial stability and risk factor. You pay less when you are seen as less risky by insurers.
For example, you require a $10,000 surety bond. You will pay anywhere from $100 (1%) to $1,500 (15%) for coverage.
There are many different types of bonds companies can purchase. The most common are contract surety and commercial, and fidelity bonds.
Contract surety bonds ensure that if you do not meet contract obligation, your client gets compensation. For example, you don’t complete a project as promised. The bond is paid to your client so they can find another company to complete the work. This is common in construction and contracting.
Bonds are available for :
Commercial surety bonds ensure entities have protection against financial risk. They guarantee a business will meet all required legal obligations.
Bonds are available for :
Fidelity bonds protect your business against employee dishonesty. It protects you from losses as a result of employee actions such as theft, damage, and other actions.
An insurance bond calculator helps you understand factors that impact bond costs. It also allows you to compare bond insurance quotes. Here are three of the main factors used to calculate bond insurance :
Contact our business insurance brokers today to calculate bond insurance rates and compare quotes.
Every business has unique needs. Do you work in construction, real estate, logistics, or any other industry? Our experts will help you find the right bond solutions. We’ll help you secure more business and satisfy client requirements.
Finding a reputable Canadian surety insurance company is vital. They need to offer you the best rates and the type of bonds your company needs. Our business experts help you find the best bond products from the best Canadian surety insurance companies.
Your customers file claims against a surety bond, not you. A client will file a claim on a surety bond if you fail to meet your obligations. The client will contact the company who issues you the bond and open a claim.
If the claim is valid, the bonding company will pay out the bond. Your company will need to reimburse the bonding company for the claim.
When companies say they are bonded, they usually refer to having a fidelity bond or surety bond. A fidelity bond is an insurance product for the business. They work the same as property and casualty insurance.
A surety bond is not insurance - they provide insurance for your clients/partners. They operate more like a form of credit. If a claim is filed against your surety bond, it will be paid out to you client. But, you need to reimburse the surety (insurer) for the claim amount.
The cost of bond insurance varies based on many factors. They include the type of bond you need and the financial health of your company. Another factor is the perceived risk of failure of a business in fulfilling business objectives. Getting a bond insurance quote is the best way to compare rates and get a cost estimate.
These bonds guarantee to your client that you will fulfill the contract. You will meet all terms and conditions.
You may need a licence bond before the government will allow you to operate your business. These bonds ensure your company will comply will all laws and regulations.
You can get bonded and insurance through an insurance broker. Many insurance companies also offer bonds and a variable of bonding insurance products
Getting bonded and insured are two separate types of coverage. The best way to determine costs is to get a quote for bonds. Get a separate quote for business insurance. Comparing quotes is the best way to get an accurate estimate of costs.
For companies with excellent credit and good standing, you can expect to pay $100 to $300 per year. This works out to 1% to 3%. If you have average or bad credit, expect to pay up to $1000 (10%) per year or more.
It’s common for surety bonds to last for one year. They can last for a number of years. The length of time your surety bond is valid is set when you purchase the bond. Once it expires, you will need to renew it.
A surety bond may or may not be refundable. Speak with your surety bond company about the terms and conditions of the bond.
