Running a business comes with many requirements. Between taxes and licenses and registration, not to mention all the day-to-day operational concerns, owners have an overwhelming list of hoops to jump through. Though purchasing needed commercial bonds can feel like just another item on the list, working with a knowledgeable agent can help make the process easier.
LICENSE AND PERMIT BONDS
License and Permit Bonds are required for many industries by law. They are necessary before a professional license can be granted by a Federal, State, or Municipal government. License and Permit bonds are meant to protect the consumer in the industry, rather than the service provider. They guarantee that the HVAC specialists, plumbers, electricians, and contractors abide by all laws and professional requirements. If a consumer feels your business has violated these obligations, they can sue for damages against your bond.
A subset of License and Permit Bonds is a Notary Bond. This type of bond protects citizens from misconduct on the part of notaries. It is required by the state of Illinois to act as a notary so that the public can have confidence that the actions of the notary fall within the legal requirements.
The Performance Bond protects government or public entities in case the contractor doesn’t perform according to the agreement. This type of bond is required for public projects exceeding $100,000, according to the Miller Act, a federal law. More specifically, Illinois’ Public Construction Bond Act requires a performance bond for any public projects exceeding $50,000.
Another common bond, the Payment Bond, protects subcontractors and suppliers, ensuring that the contractor pays what is promised. It makes certain that subcontractors and suppliers won’t be unpaid for their work if the contractor cannot or will not pay.
Commercial bonds of these types are generally a small investment, perhaps only 1-15% of the full bond amount. They are often necessary to comply with the law and they offer the obligee, your customers and subcontractors, some peace of mind. They can rest in the fact that you are putting your money where your promise is. Purchasing these bonds also gives the principal, your business, an interested party in determining whether you broke your bond or not. As the principal, you may not be found in violation and your bond provider, known as the surety, will have a great interest in finding that in order to mitigate additional damages and exposure.
While many companies offer these types of bonds…with a few clicks you could probably purchase one in minutes online without ever talking to anyone…there is value in working with an agency that understands these products and offers multiple providers and personal service.
Having a good bonding agent and agency will help your business grow and prosper.
At Compass-Metz Stoller we have unparalleled experience insuring all aspects of businesses. Please let us know how we can help your business meet your bonding needs.