Do I Need a Surety Bond?

K. L. Owens & Associates, LLC. provides all types of insurance for contractors and small businesses. If you are a contractor or provide a professional service, you may need to think about getting a surety bond. Surety bonds are a contract that guarantees that the provider of the service will complete their promised work, and provides coverage if the service provider causes damage or loss to a client.

When Would You Need a Surety Bond? Surety Bond Img

Whether or not you need a surety bond depends on the type of work you do. Typically, contractors, manufacturers, and suppliers hold surety bonds.

Types of Surety Bonds:

Contract: If you are a contractor, you may be required to hold a surety bond as part of your bidding process. This way, if you fail to complete your promised job, or you cause damages, the surety bond will pay your client to repair the damages or cover the cost of another contractor completing the job.

Business Services (Fidelity): These types of bonds cover you if you have employees working on client premises. For example, if one of your employees steals from your client, the bond would pay to have the stolen item replaced or reimbursed.

Fidelity Bond for Pension Plans: If your business has a defined benefit (pension) plan, you are required to hold a fidelity bond equal to at least 10% of the assets, up to $500,000 (of $1 million if the plan holds employer securities). These types of bonds protect against the dishonesty of those handing the pension plan.

For more information on surety bonds, check out the US Small Business Administration website. Or, simply give us a call at K. L. Owens & Associates, LLC. and we will help you decipher if and what type of surety bond you need to protect you and your clients.


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