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Bonds in New Braunfels, TX

Even the most experienced businesses must diligently account for various risks and exposures, as failing to prepare for the unexpected could have significant consequences. In many cases, implementing loss control measures may also necessitate retaining the means to compensate other parties. In these situations, bonds may be necessary investments.

What Is a Commercial Bond?  person holding pencil near laptop computer

Commercial bonds, also known as commercial surety bonds, are among the most commonly purchased. While the exact details and limitations of these loss control instruments may vary, commercial bonds are generally used to provide financial security and peace of mind to clients and other parties involved in formal business agreements. Many businesses may be required to retain appropriate commercial bonds to ensure access to or eligibility for specific opportunities.

Types of Commercial Bonds

While commercial bonds are only one of many types of bonds, there are many subcategories. Given this array of options, companies should prioritize working with qualified insurance professionals, such as those at Primero Insurance, to ensure they understand and acquire the right products.

Commonly suggested commercial bonds may include the following:

  • Performance bonds
  • License and permit bonds
  • Contract bonds
  • Court bonds
  • Fiduciary bonds
  • Public official bonds
  • Title bonds
  • Miscellaneous bonds

How Do Surety Bonds Work?

Surety bonds encompass commercial bonds and, therefore, make up a significant portion of the bonds purchased by U.S. businesses. While there are many subtypes of surety bonds, these loss control instruments typically function as an agreement among the following three parties:

  • The principal, such as a business or contractor, is responsible for purchasing surety bonds should the obligee deem them necessary.
  • The obligee, such as a client or project owner, determines if surety bonds are needed to secure their financial interests.
  • The surety, such as an insurance company, underwrites and maintains bonds purchased by the principal.

If a principal is unable to fulfill their contractual obligations, surety bonds provide the obligee with a means of recouping their losses without needing to pursue legal action. The surety can then seek compensation from the principal.

We’re Here to Help

At Primero Insurance, we’re well-equipped to help businesses in the New Braunfels area understand and address their bond-related needs. Contact us today to learn more.

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