Bonds are not insurance policies – they are guarantees.
Ion Insurance can provide businesses small and large with the following bonds.
This type of bond guarantees the performance of what was agreed in the contract. The guarantee is based on the outcome, completion and quality of the final product. The buyer is compensated if the supplier fails to meet the minimum standards, defaults or declares bankruptcy. These bonds require some kind of collateral property or investment, and the premium expense is roughly 1% to 2% of the total contract price.
Also known as a Tender Bond, this option guarantees the beginning of work once a bid is won. Once a contractor is awarded a project, it’s assumed a contract will be drawn up with your suppliers. Should that contract be granted, the Tender Bond further commits the buyer to a performance bond. If the contract falls through, there’s a penalty for the value of the bond, typically between 5% and 20% of the contract’s value.
This bond is intended to reimburse the holder for any actual or claimed loss caused by the insured’s conduct or another person’s conduct resulting in financial losses. The indemnity bond assists with covering losses related to a contract’s agreed-upon terms.
This bond guarantees payment to all sub-contractors and vendors, particularly when advance payments are made before the contract reaches its term. Should the project be completed in an unsatisfactory manner or not at all, the bond ensures the buyer gets compensated for these costs, which often include the equipment and materials needed for the job. These bonds often have a specific period during which they can be used, usually lasting six months.
Guaranteed to a state or federal agency, this type of surety bond is also known as a permit bond or commercial bond. Government agencies require them when a business is applying for a license. The bond acts somewhat like a contract, guaranteeing the business will operate in accordance with all federal, state or local laws and regulations. Further, the license bond protects that governing body from any related damaged, including fraudulent practices. For some businesses, obtaining a license and bond are prerequisites to opening.
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