A commercial bond is a type of insurance policy in which a surety or insurance company guarantees — through financial backing — a business performance. There are several types of similar bonds, including surety bonds and fidelity bonds, which protect your customers or clients against unsatisfactory results. Here’s when you might need one.

When a Client Requires It

When a customer hires contractors for a large construction project, it is common for them to require the contractor to purchase a surety bond that guarantees completion of the work. If the contractor can’t complete the project as promised, the insurer or surety company is then responsible for the cost of hiring another contractor to complete the project. When a client requires the purchase, it is known as a surety bond. A bond purchased voluntarily is known as a fidelity bond.

When You Want to Reassure Potential Clients

A fidelity bond reassures potential clients or customers that they are not at financial risk because of their employees if they hire you. For instance, if you own a painting, cleaning, or appliance installation business in which your employees regularly enter customers' homes, advertising that your company is backed by a commercial bond might convince an indecisive client that it's safe to deal with you. If the customer experiences financial loss due to fraudulent or illegal activity on the part of one of your employees, the insurance company will make them whole on your behalf.

If you wish — or are required — to purchase a commercial bond, contact the experts at Integrity Insurance Solutions in San Marcos, TX. They will help you design the right auto, life, or homeowners insurance policy for your needs. Visit their website to contact them online, or call (512) 396-2211 to request an insurance quote.