Bonds in Waterloo, Iowa

Businesses in the Waterloo community work together daily to better their community and advance their missions. However, despite your company’s best intentions and exciting aspirations, unexpected mishaps may inevitably impact your ability to maintain optimal operations. Accidents, errors and other incidents could potentially derail your plans. When such scenarios impact other parties, such as your clients and customers, having appropriate loss control measures, such as bonds, can be critical.

What Are Bonds?

Bonds are loss control measures often sold by insurance companies. While frequently referred to as bonds insurance, these products operate differently than many traditional insurance policies. Although bonds can provide similar financial protection for your business, they are frequently purchased to cover losses involving a single job or contract rather than fostering ongoing protection for potentially multiple incidents within a coverage period.

Are There Different Types of Bonds?

Your business may require various types of bonds depending on its industry, operational details and client preferences. Still, while more nuanced products may be available to you, many of the most commonly used bonds in U.S. business arrangements fall under the following classifications:

• Surety bonds—These loss control measures, also known as commercial surety bonds, can help reassure other parties regarding possible financial losses arising from your business’s shortcomings. These bonds typically entail an agreement between the following three parties:

• The principal, such as your business

• The obligee, such as your client

• The surety, such as your insurance company

If the principal fails to fulfill their obligations, the obligee can recoup their losses through surety bonds without a need for litigation.

• Fidelity bonds—These bonds, also known as honesty bonds, are often essential if your business dispatches workers to a client’s location or otherwise has access to their valuables and assets. Fidelity bonds can help pay for losses and expenses arising from wrongdoing committed by your employees, including contract workers. Specifically, aid may be available after the following acts:

• Forgery

• Theft

• Burglary

• Fraud

• Illicit transfer of funds

• Property damage

Why Are These Measures Important?

Bonds can play a critical role in sufficient risk management measures, as they can ensure other parties are compensated when your business is to blame for their losses. Without suitable bonds, clients may have little recourse but to sue your company, potentially resulting in an extended legal battle and irreparable business relationships.

We’re Here to Help

Contact the Elliott-Hartman Agency today to learn more about bonds and ensure you’re equipped to withstand unexpected financial losses.