Staying abreast of ever-changing business bonding insurance news and trends could help you protect your company from employee wrongdoing. The ups and downs of the bond insurance industry could affect business owners who look to these companies to provide protection in the event of loss of property or money due to employee wrongdoing such as forgery, larceny, theft and embezzlement. Therefore, it's important that you stay updated on business bonding industry news.

Consider the following tips to help you learn more about how shifting business bonding insurance news and trends could affect your business:

1. Research how the economy may affect business bond insurance industry.
2. Learn more about AAA-ratings for business bonding insurance providers.
3. Stay abreast of new and closing insurance and bonding companies.
   

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Stay informed on business bonding insurance industry news

There are various types of bonds available to businesses including a license, payment, indemnity, bid and performance bond. Each of these bonds provides a specific customer guarantee. The state of the economy has a direct affect on the million-dollar bond insurance industry. When the industry is doing poorly, the government can step in to issue FDIC-backed bonds to prevent bonding companies from going under.

I recommend: Learn more about the health of the business bond insurance industry by reading New Jersey On-Line. You can also find articles on business bond insurance at the Insurance Journal, which covers a wide range of insurance topics.

Research AAA-rating designations for business bonding companies

The AAA rating is the top distinction designated by leading ratings companies such as Fitch Ratings and Moody's. A debt rating of AAA indicates a company is financially healthy and can borrow money at lower interest rates than those with less favorable credit ratings. If boning insurance companies incur too much debt, then their AAA rating can be dropped.

I recommend: Read more about AAA ratings for insurance and bonding companies by checking out The Bond Buyer. You can also learn more companies offering services for bonding a business by visiting Another Financial Portal.

Monitor business bonding insurance company business deals

Several of the largest U.S. bond insurance companies including Financial Guaranty Insurance, Ambac Financial and MBIA can be affected by changes in the economy. To save their businesses, many bond insurers may decide to reorganize their companies through mergers, acquisitions and other business ventures.

I recommend: Read more about trends in the business insurance and bonding industry by visiting Reuters. Learn more about the bonded insurance market by reading CNN Money.

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• •  It's important to closely monitor news and trends surrounding the bond insurance industry because financial guarantor issues greatly affect financial markets and the economy as a whole. It's a good idea to subscribe to electronic news alerts provided by trusted financial news resources to ensure you can track the latest news on the business bond insurance market and its affects on the world economy.

Getting bonded gives your business an edge over the competition. A bond, or surety bond, is a three-party guarantee insuring that a product or service is made or delivered, and that specific rules are followed. Although most surety companies are also insurance companies, getting bonded is more comparable to getting bank credit than to buying insurance.

Most contractors are bonded, but now other small businesses are using bonds to put their customers at ease and to generate more business. Any business where you enter someone’s home, such as housekeeping or pet-sitting, can benefit from being bonded. Also, some states require bonding for certain professions, such as real estate agents. Bonding is relatively inexpensive and can also protect you if your employees commit a crime while on the job.

The main types of bonds are:

1. A bid bond guarantees that the contractor will enter into contract at bid price
2. A performance bond guarantees the work will be done
3. A payment bond ensures subcontractors and suppliers are paid
4. A fidelity bond protects the employer in case of any loss of money or property due to employee dishonesty
5. A license bond is required by some states for certain businesses and guarantees you will comply with statutes and regulations

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Get your paperwork in order

Submitting a complete package of information to the bonding company will speed up the process. Your accountant or financial planner will need to provide some of the information, but some will have to be provided by you, such as a business plan, your work history and resumes of key employees.

I recommend: View some sample forms at The Surety and Fidelity Association of America.

Find an agent

You can most likely go through your current insurance agent, but make sure they have experience handling bonds.

I recommend: Find a surety bond producer in your state at the National Association of Surety Bond Producers. If you're working on a project for the federal government, you will need a surety that has a certificate of authority from the U.S. Dept of the Treasury.

Check SBA bonding assistance

If you're a small or emerging business that is having trouble getting bonded through commercial firms, the U.S. Small Business Administration (SBA) can guarantee bonds for contracts up to $2 million, covering bid, performance and payment bonds.

I recommend: Get additional information and find out if you qualify for the program from the SBA.

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Helpful advice for making the most of this Guide

• •  A bond is not an insurance policy. A bond will not cover you for property damage or injury resulting from your work.
• •  Get your references set up. The bond provider is going to ask for them.
• •  Make sure your accountant understands the nuances of your business and can provide the boding agent the information needed to get you approved.

Learning about business bonding insurance basics can help you protect your company’s reputation. Business bonding insurance provides protection for employers in the event of loss of property or money due to employee wrongdoing. In short, business bonding guarantees that a customer will receive his or her goods or services regardless of the acts of the company’s employees.

Typically, small business owners will obtain business bonded insurance to provide protection in the event service employees or contractors steal from the home or office of customers. If this occurs, a company insured by bond insurance will be covered if the employee is convicted of theft. Consider the following tips to help you gain a better understanding of business bonding insurance basics:

1. Research state insurance and bonding guidelines.
2. Learn about the primary types of small business bonding insurance policies.
3. Evaluate which risks are covered by business bond insurance.
   

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Learn more about state regulations for business bonding insurance

State government offices, insurance agents and other business resources will be able to provide you with details on regulations for bonding a business. While not all states require business owners to carry bond insurance, it may be beneficial for you to explore the benefits of obtaining this type of coverage.

I recommend: Check out the Department of Consumer Affairs to learn more about requirements for bonding a business. You can learn about individual state requirements by visiting state websites. For example, learn about Michigan bonding insurance requirements by visiting the State of Michigan website.

Determine if you need business bonding services

Bonding a business provides protection for the customer and demonstrates to the customer that you're willing to stand by your work. There are various types of bonds available including a license, payment, indemnity, bid and performance bond. Each of these bonds provides a specific customer guarantee. Many customers won't conduct business with a company unless the company is bonded. It's important to note that bonding companies will typically only allow you to carry coverage for which you can cover with your current liquid assets.

I recommend: Learn more about the types of bonds available by reading information provided by the Small Business Advisor. You can also read more about various bond insurance products by checking out The Travelers Companies.

Assess risks insured by bonding a business

Business bonding insurance covers employers for acts of theft, forgery, embezzlement and larceny committed by employees. Bonding a business doesn't cover liability due to work accidents, job injuries or poor workmanship.

I recommend: Read more about bond insurance protections by visiting Safeco. You may also obtain more information about business insurance bonds by checking out Sharp Insurance.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  Bond insurance is often confused by business insurance policies which cover property and liability risks. Business bonding insurance won't cover property damage or personal liability claims. It's best to discuss your bonding insurance coverage options with a licensed insurance agent who specializes in bonded insurance for your specific business type.

Business bonding insurance helps owners protect their assets from employee wrongdoing, as well as any catastrophic events that might arise from construction projects that the company may embark on. There are numerous types of bonds available on the market today and when the bonding insurance industry is struggling, the government can intervene to protect the business owners. Getting bonded can help your business provide reassurance to consumers, particularly if you are in the construction business, which is a big market for bonding insurance companies. Small business owners in particular benefit from bonding because it helps them stand out from their competition.

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Surety bond

A surety bond is an agreement between a principal (the party who will be fulfilling a contractual obligation), an obligee (the party who is receiving the service) and the surety (who ensures the principal's obligation is performed). There are various types of surety bonds that business bonding companies offer, including bid, payment and performance to name a few.

I recommend: U.S. Small Business Administration explains this term and has various resources you can refer to.

Bid bond

A bid bond is a type of surety bond issued as part of a bidding process by the surety (a bonding insurance company) who guarantees that the winning bidder will complete the contract under the terms that were articulated in the bid.

I recommend: Go to Investopedia for more information on this type of bond.

Payment bond

A payment bond is a type of surety bond that stipulates payment to certain parties in the event of a breach of contract by a contractor on a construction project. Payment bonds are a type of bond offered by business bonding insurance companies.

I recommend: Donahue Consulting explains payment and performance bonds in "plain English."

Performance bond

A performance bond is another type of surety bond that is issued by a bonding insurance company that guarantees a contractor will complete a project satisfactorily. These are commonly used in the development and construction of real property. It is usually a guarantee that the work will be completed in case of an unforeseen event.

I recommend: You can find more information on this type of bond at InvestorWords.com.

Indemnity

An indemnity bond is an insurance policy that provides financial protection for an organization against possible damage, loss or liability for any claims arising from the project. Business bonding insurance companies can provide indemnity bonds.

I recommend: TeachMeFinance.com has a description of this term.

License bond

A license bond is also sometimes referred to as a permit bond. It is an instrument that guarantees a contractor will comply with all the state, county and city laws that govern the issuance of the license. Business bonding insurance companies can provide this type of bond to companies that request them.

I recommend: For more information on this type of bond go to JW Bond Consultants.