Guarantee Your Work With a Surety Bond

In any business, there are many risks and factors to consider. Most business owners truly believe in the work they are doing and will do everything in their power to bring quality services and products to their customers. Unfortunately, life is unpredictable, and with the hazards facing our small and large businesses, it can be unnerving to think of how to stay afloat when things go wrong. That's where Surety Bonds come in. This essential insurance coverage can safeguard a range of potential risks, from guaranteeing contracted work to protecting employer interests in the event of employee theft. It is an essential part of most any industry to create peace of mind in your workplace and with your customers.

There are many types of bonds, and understanding the specific ones for you and your business can feel complicated. Our experienced insurance professionals at Nicholson & Associates are well-versed in a variety of common bonds as well as state requirements. We can walk you through the process and help you easily obtain the necessary guarantees needed for your line of work. This will help you keep your customers happy and business running smoothly, even when the unexpected happens.

Contractors Bonds

Many industries and small business owners may contract out their work. Depending on the type of work, this may be the nature of the industry or a great way to expand your business. Either way, Contractors Bonds are an essential part of instilling confidence in the customers and vendors that you do business with. On any given project, most skilled and experienced contractors will take the necessary steps to ensure everything is properly planned and executed to the highest standard.

However, life is unpredictable, and sometimes obstacles or external factors may prevent you from fulfilling your contract. Most contractors don't plan to leave a project unfinished, but unfortunately this isn't always in their control. Whether it's due to insufficient staff, a lack of materials, or a personal emergency, neither you nor your clients want to have a job abandoned without some sort of protection in place. Contractors Bonds serve as that fail-safe solution in the event you are unable to complete the agreed upon requirements of the contract. With each type of Contractors Bond, you (the principal) guarantee that you will fulfill your obligation to your client (the obligee). In the event something goes wrong, your client can file against your bond to cover any financial losses they incur. It's important to note that in this circumstance, you are responsible to indemnify the bonding company (the surety) in the event they do pay anything to your client on your behalf.

A Contractors Bond or Surety Bond is the perfect solution to life's uncertainties in contracted work. There are many reasons a project may not go as planned, but the most common Surety Bonds for contractors include:

  • Bid Bond: obligate a contractor to follow the terms of a bid
  • Payment Bond: obligate a contractor to pay all subcontractors and material suppliers
  • Performance Bond: obligate a contractor to meet specific performance standards
  • Warranty Bond: obligate a contractor to honor the terms of a warranty
  • License Bond: obligating a contractor to follow state licensure requirements

Bonds of this nature are typically good for one year and are relatively inexpensive considering the amount of peace of mind and protection they offer your clients. Additionally, if you wish to become licensed as a contractor, you will need to obtain a bond to demonstrate that you are conscious of potential pitfalls and are taking precautions to protect those you do business with.

Getting licensed and bonded as a contractor is a great step in the right direction to build trust and rapport with your clients. Contact us today to speak with one of our licensed commercial lines agents and find the right Contractors Bond for you.

ERISA

As an employer, you may wish to provide retirement plans or health insurance benefits to your staff. Your employees are the backbone of your business, so it goes without saying that you want to offer perks that will make them feel valued on your team. With these types of benefits, it is important to make sure that you take the step to protect your employees. No one likes to think about retirement funds being mismanaged, or worse, stolen by administrators. However, in reality this is a very real risk facing the management level of many organizations, so it is always better to be prepared and protect your employees with an ERISA Bond.

The history of the ERISA bond begins in 1974. A federal law was passed in the United States regulating retirement and health plans in the private sector, called the Employment Retirement Income Security Act, or ERISA. What does this mean for employers? As a business owner with staff, it is your responsibility to ensure that your employees' benefits are protected against misconduct by your administrative team, otherwise called fiduciaries. With an ERISA Bond, your employees are protected against misuse or misappropriation of retirement funds by fiduciaries. In the event misconduct occurs, your employee can file against the ERISA Bond for the financial loss, which the fiduciary is responsible for paying back.

ERISA Bonds are quite specialized and can feel more complex than other insurance products. Contact us today to speak with one of our commercial lines agents to learn if an ERISA Bond is necessary for your business.

Fidelity Bond

Businesses are only as strong as the staff that support them. As a business owner, you strive to do your due diligence and hire only the most qualified and ethical people to represent you and your brand. Unfortunately, even staff that interview well and perform exceptionally can still potentially disappoint when it comes to honesty. Fidelity Bonds help protect your interests as an employer in the event of employee dishonesty or fraud.

Every successful business has a risk management plan to help mitigate losses and be properly protected when they occur. A Fidelity Bond is an essential component of any risk management plan, no matter how ethical your staff may seem. Theft is usually a crime of opportunity rather than premeditated thought, and you can never fully prevent these opportunities from coming up. By carrying a Fidelity Bond, you can protect your business and your clients in the event of fraudulent activity by one of your staff.

Running a business takes an immense amount of time, and you have hired staff to execute their expected roles and responsibilities without your direct supervision all the time. This creates potential opportunities for employee dishonesty to occur. It is critical to establish routine checks and safeguards to prevent these chances for fraud as much as possible. The best ways to mitigate potential employee dishonesty include:

  • Background checks prior to hiring
  • Requiring 2 signatures for all checks
  • Reconciling bank accounts by someone without fiduciary responsibility
  • Conducting audits of financial records and inventory
  • External audits of the books by an independent accountant or accounting firm

Even with all of these practices in place, employee fraud can still happen. Contact us today to speak to one of our licensed commercial insurance agents and learn how you can better protect yourself and your clients against employee dishonesty.

Fiduciary Bond

Throughout life, there are many instances where someone may be appointed to make financial or legal decisions on behalf of someone else. This is most common in cases where someone passes away, or perhaps becomes unable to manage their assets due to illness. The person designated to carry out these duties is called a fiduciary, and they have the responsibility and obligation to honor the represented person's wishes. In the event there is a breach of trust and mismanagement of assets, a Fiduciary Bond can be used to protect the interests of the deceased or incapacitated individual.

A person designated as a fiduciary is being given an immense amount of power based on a relationship of trust. Unfortunately, not everyone granted this power honors the obligation it brings. This can result in embezzlement, fraud, or dishonesty by the fiduciary and cause financial losses to the represented individual's estate. If this occurs, a Fiduciary Bond can be used to cover such losses and also hold the fiduciary financially liable. Even if the appointed person is a lifelong friend, close family member, or long-term legal representative, it is always best practice to obtain a Fiduciary Bond just in case an opportunity for fraud arises.

Oftentimes, bonds are required by the court when you have been appointed as a fiduciary. They will indicate a required bond amount, which is based primarily on the value of the estate you are representing. Don't worry- the cost of the bond is much lower than the amount you are being covered for, often falling around a few hundred dollars a year.

If you are planning to designate a fiduciary or have been recently appointed, now is the time to look at options to protect yourself. Contact us today to speak with one of our licensed commercial agents and discover how a Fiduciary Bond can cover you and your assets.