Surety Bond

Find The Best Surety Bond Rates

Business is built on trust. There are times where businesses need more than their word and a handshake to win a contract. You have to provide clients with a guarantee. Surety bonds can provide this guarantee. They prove you are legitimate and committed to meeting your obligations to customers, suppliers, and partners.

At ThinkInsure, we’ll help you find the right surety bond and help you thrive. We are partners with the top insurers in Canada so we can compare the best quotes and options for you.

What Is A Surety Bond?

A surety bond protects your clients and suppliers against loss if you fail 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 and contract surety. They can also be known as a contractors bond or construction bond. Some providers require businesses to secure a surety bond as part of the contract.

A surety provides your clients and partners with additional protection and reassurance.

Why Do I Need A Surety Bond?

There are a number of reasons why bond insurance may be ideal for you :

Credibility : Being a bonded company adds to your credibility.
Reassurance : It tells your customers, partners, and everyone else that you will complete work as stated.
Show you are legitimate : Being bonded is a trust factor and shows others you are legitimate.
Competitive advantage : Being bonded will give you an edge over those without bonding. Customers are more willing to work with you if you are bonded.

Do I Legally Require A Surety Bond?

By law, some organizations in Ontario and Canada must purchase surety bonding insurance due to the nature of their operations or industry. Make sure you are aware of your licencing and bonding requirements. Others purchase bonds to increase company credibility.

How Surety Bonds Work

A surety bond involves 3 parties :

Oblige (your client or business partner) : The bond is payable to them if you fail to meet obligations.
Principal (your business) : You need to complete defined activities for your clients.
Surety (your insurer) : They assume the obligation if you cannot. They pay your client if you default on your obligations.

How To Get Bonded In Canada

Getting a bond is like shopping for insurance. Follow these steps :

Determine bond requirements : Research requirements for your business and industry. They vary based on your location, type of business, and other factors.
Find providers : Working with an advisor will give you access to more bonding options and providers.
Get a quote : Review options to determine the bonding options available to you.
Review quotes and choose a bonding company : Choose a bond that meets your business and financial requirements.
Sign agreement and pay : Sign up for the bond and select a payment method.

What Is The Average Cost Of A Surety Bond?

Surety bond costs are variable. Insurers base the amount on your level of risk of not meeting your obligations. They also consider the amount of you need, and the odds of you filing a claim. The amount is set as a percentage of the total cost of the bond.

The average amount of a 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 hazardous by insurers.

For example, you require a $10,000 surety bond. You will pay anywhere from $100 (1%) to $1,500 (15%) for coverage.

Types Of Surety Bonds

There are many different types of bonds companies can purchase. The most common are contract surety and commercial, and fidelity bonds.

Contract Surety Bonds

This ensures that if you do not meet contract obligation, your client gets compensation. For example, you do not complete a project as promised. The bond is paid to your client so they can find another party to complete the work. This is common in construction and contracting.

Bonds are available for :

Bids
Maintenance and supply
Performance
Lost securities
Labour and material payments

Commercial Surety Bonds

This ensures entities have protection against financial loss. They guarantee a business will meet all required legal obligations.

Bonds are available for :

Fiduciary
Licenses and permits (Government may require this before you can operate)
Canadian customs and excise
Lost documents

Fidelity Bonds

Fidelity bonds protect you against employee dishonesty. It protects you from losses because of employee actions such as theft, damage, and other actions.

Surety Bond FAQs

What Industries Commonly Use Surety Bonds?

Bonds are available and used by many companies. Here are the industries where this is most common :

Construction
Contractors
Transportation
Logistics
Manufacturing
Resources
Auto dealers
Real estate
Retail and wholesale
Import, export
Finance, law
Many more

What Does It Mean To Be Bonded And Insured?

It is common to see businesses list “bonded and insured” on their website and in ads. Companies that are bonded and insured have a 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.

How Does Surety Bonding Insurance Protect A Business?

Surety bonding insurance provides an added layer of protection against internal threats. It protects your business against :

Internal fraud : Intentional or inadvertent fraud activities by your employees.
Theft : Employee theft while at a customer’s location.
Incompetence : Dishonest actions by your employees.

What Are Contract Bonds?

Bonds guarantee to your client that you will fulfill the contract. You will meet all terms and conditions.

What Is A Licence Bond?

You may require 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.

How Much Is A $10,000 Surety Bond?

If you have 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 $1,000 (10%) per year or more.

How Long Does A Surety Bond Last?

It is common for them to last for one year. They can last for several years. The length of time it is valid is set when you purchase the bond. Once it expires, you will have to renew it.

Is A Surety Bond Refundable?

It may or may not be refundable. Speak with your provider about the terms and conditions of the bond.

How Do You File A Claim On A Surety Bond?

Your customers file claims against a surety bond, not you. A client will file if you fail to meet your obligations. The client will contact the company who issues you the bond to start the process.

If the claim is valid, the bonding company will pay out the bond. Your company will need to reimburse the bonding company for the amount.

Get A Surety Bond Quote

Finding a reputable Canadian surety insurance company is vital. They need to offer you affordable rates and the type of bonds your company needs. Our experts help you find the right bond products from the top Canadian providers.

Get quotes for surety bonding insurance from the top insurers in Canada.