Bonds in Chicago, IL

As a responsible business, you must prioritize risk management and loss control measures to ensure that you are prepared for the aftermath of accidents, errors and other unforeseen hardships. Preparing for situations in which you are liable for other parties’ losses may be particularly crucial, as resulting lawsuits could have significant consequences for your company’s finances and reputation. Given these stakes, understanding, acquiring and maintaining appropriate bonds may be critical.

What Are Bonds?

Bonds are a financial tool often sold by insurance companies to help secure the fiscal interests of parties entering formal business agreements. Because of the peace of mind and financial security they offer, clients and customers may often require these arrangements. As such, your business could miss out on opportunities by failing to understand and secure them.

Types of Surety Bonds

Surety bonds are among the most commonly purchased, required and utilized bonds in U.S. business agreements. These instruments can provide your clients with the means of recouping their financial losses if you cannot fulfill your contractual obligations. Surety bonds typically work by establishing the following three parties:

• The principal, such as your business, is responsible for purchasing required surety bonds.
• The obligee, such as your client, determines if surety bonds are necessary to secure their financial interests.
• The surety, such as an insurance company, maintains bonds, which can then be used to reimburse the obligee for losses if necessary.

While most surety bonds generally function similarly, they may come in many forms, including the following:

• License and permit bonds
• Contract bonds
• Court bonds

What Does It Mean to Be Bonded and Insured?

Alongside insurance policies, bonds are critical in providing financial security and peace of mind for your business and clients. As the term may suggest, being bonded essentially means that your company has secured appropriate bonds, such as surety bonds and fidelity bonds, for a project or contract. Similarly, being insured means that your company has adequate business insurance, including fulfilling any legal requirements or other obligations, such as those regarding workers’ compensation insurance and commercial auto liability coverage.

We’re Here to Help

With over 50 years of experience helping businesses in the Chicago area secure their financial interests, Salvador Insurance Agency is well-positioned to help your organization understand and fulfill its bond-related needs. Contact us today to learn more.