As a business owner, you understand that staying compliant with the law is essential to your success. But did you know that specific laws govern the surety bond industry? If you’re not familiar with these laws, you could be putting your business at risk. Here are five ways to stay bond compliant in your biz.
1. Make Sure You’re Using A Licensed Surety Agent
There are strict laws governing the licensing of surety agents. Make sure your agent is properly licensed in your state. You can check with your state’s insurance department to verify that your agent is licensed and in good standing.
If you’re not using a licensed agent, you could be putting your business at risk. A licensed agent is familiar with the surety bond industry and can help you navigate the complexities of the bond process.
To know if your agent is licensed, ask to see their license and check the expiration date. If it’s expired, or if they can’t produce a license, find another agent. Also, try and check with the Better Business Bureau to see if there are any complaints against your agent. You don’t want to do business with someone with a history of complaints.
2. Get Familiar With The Different Types Of Surety Bonds
There are many types of surety bonds, each with its purpose. The common type of bond is the performance bond, which guarantees that a contractor will complete a project according to the terms of their contract.
Other common types of bonds include payment, bid, and supply. MCS 82 bonds are a type of surety bond that’s required for federal contractors.
When you’re unfamiliar with the different types of surety bonds, you could risk your business. Make sure you understand the purpose of each type of bond and how it can protect your business.
If you’re working with a contractor, ask about their bond type. Find another contractor if they don’t have a bond or if you’re unsure what type of bond they have.
3. Understand The Bond Process
The surety bond process is complex, so it’s important to understand how it works.
The first step is getting a quote from a surety agent. This quote will include the premium or the cost of the bond.
Once you have a quote, you’ll need to complete an application and submit it to the surety company. The surety company will review your application and decide whether to approve you for a bond.
After being approved for a bond, the surety company will issue the bond and send it to you. You’ll then need to sign and return the bond to the surety company.
If you’re working with a surety agent, ask about the process and what you need to do. If they can’t explain it to you, find another agent.
4. Know The Requirements For Maintaining A Bond
Once you have a bond in place, it’s important to know the requirements for maintaining it.
Most bonds require that you maintain a certain level of insurance, so check with your agent to see what is required.
You’ll also need to keep up with any changes in the law that could affect your bond. For example, if you’re a motor vehicle dealer, you’ll need to keep up with changes in motor vehicle laws.
The requirements vary with regard to the type of bond, so it’s important to be familiar with the requirements for your particular bond.
Ask your agent about the requirements for maintaining your bond. If they can’t explain it to you, find another agent.
5. Review Your Bond Regularly
Even if you comply with all the requirements for your bond, it’s important to review it regularly.
Things can change over time, and you must ensure your bond is still adequate for your needs.
For example, if you’ve been in business for a few years, you may need a higher bond limit than when you first started.
Review your bond at least once a year, and make changes as needed. If you’re unsure how to review your bond, ask your agent for help.
Surety bonds are an important part of business, but they can be complicated. By following these tips, you can be sure you’re staying compliant with your bond and protecting your business. When you have any questions about surety bonds, be sure to ask your agent. And if you’re ever in doubt, it’s always better to err on caution.
