In an effort to help consumers better understand the niche surety industry, Insider contributors have created a seven-part series answering the most popular surety questions. Check out the previous posts in the series, then read on to learn how to get bonded and insured.
How Do I Get Bonded and Insured?
To obtain a surety bond and business insurance, you’ll need to contact both an insurance company and a surety company.
A surety bond is not the same thing as traditional insurance, and often business owners need both. Depending on your business, you might need a license and permit bond or a commercial bond. Sometimes, your business industry’s laws require more than one bond. Some of the bonds required in different industries include the following:
- Freight broker bond: prevents fraud and guarantees that payments to motor carriers and shippers are made in a timely manner
- Auto dealer bond: guarantees that auto dealers adhere to applicable laws and don’t engage in unfair business practices
- Business service bond: protects clients against theft by employees working in their homes
- Sales tax bond: ensure that businesses pay taxes as required and report earnings accurately
- Alcohol tax bond: ensure that businesses that sell alcohol pay all applicable alcohol taxes
Applying for a surety bond quote requires that you provide the surety company with your financial history, which they use to determine your premium (we’ll discuss surety bond cost in Part 7). Typically, you’ll have to provide your own personal information and your business’s name, address, and phone number. Often you will need to provide the surety company with the bond form for the bond you’re purchasing, so you should know what kind of bond you need before applying (a surety specialist can answer questions about the particular bond you need).
After purchasing your surety bond, you may be required to file it with the government agency that regulates your industry. You may also be required to display a copy of your bond, much like businesses display their licenses. Having these documents visible assures customers that your business is reputable and trustworthy.
Getting insured is a similar process. The amount of insurance coverage you purchase will affect your rate, along with your business’s size and industry. You’ll need to provide your insurance agent with your personal and business information, like when you apply for a surety bond. To get the best insurance rate available, be sure to get several quotes from different companies before making a purchase.
After you’ve obtained the bonds you need and purchased business insurance, you’re ready to go! Advertising your business as “bonded and insured” solidifies its credibility and reassures customers that you have their best interests in mind.
Now that you’ve learned almost everything there is to know about surety bonds, we’ve got just one subject left: the price. Stay tuned for the last post in the series, Part 7: How Much Does a Surety Bond Cost?
Read the rest of the Surety FAQ Series:
Surety FAQ Series Part 1: What is a Surety Company?
Surety FAQ Series Part 2: What is a Surety Bond?
Surety FAQ Series Part 3: What is a Contractor Bond?
Surety FAQ Series Part 4: Why Do I Need a Surety Bond?