Bond Insurance generally falls into two categories: Fidelity Bonds and Surety Bonds.
The main reason for insuring bonds is to prove to the investor that your bond is safe. Investors will want to know that their bond will be repaid no matter what happens to your business in the future. If you declare bankruptcy, they will still want to be paid with any owed interest. Insurance for bond issuers can help their credit rating or reduce interest payments on the bonds.
Fidelity bonds are those that protect you against employee theft or other dishonesty that negatively affects your business. Bonds can be taken out on single employees or multiple ones. The cost of the bond depends on how valuable the property is that the employee will be handling. For example bank employees, stock traders or diamond traders have a high level or risk if anything happens to their product. If an employee embezzles money from your or steals outright, you’ll be covered.
The insurance company has the right to demand certain guidelines be followed when new employees are hired in order for bonds to be issued. If the company does not follow the guidelines, the insurance no longer applies. If the employee takes on new responsibilities or is demoted, the policy no longer applies. Fidelity insurance, or bonds, is required by law for some companies, such as those that deal with money. Fidelity bonds also protect employers if their employee steals or embezzles from a client while on their property. A payout is given to compensate the person or company that suffered the loss.
Surety bonds involve three parties, the principal, the obligee and the surety. The principal contractually agrees to perform a service for the obligee. If that service is not performed to the extent agreed upon, of there are damages or loss associated with the service, then the surety, who insures the principle, pays the obligee.
If you need bond insurance let Richard Turner San Diego Insurance Agency help you.