Do you know what business service bonds can do for your business? Maybe you’ve heard of them but aren’t sure what they are for. Keep reading to find out if you might need one for your business.
What is a business service bond?
Business service bonds are not a legally mandated bond, like most. Instead, many businesses whose services involve sending employees to a client’s home�like housekeeping, pest control, pet sitters, painters, gardeners, etc.�purchase a business service bond. The bond protects the client in case an employee steals or causes other kinds of damage to a client’s home or property.
Most business service bonds are in amounts dependent on the number of employees the business has. Businesses can choose coverage of $5,000 to $100,000 for any number of employees. It’s important to remember that the amount you pay for your surety bond�its premium�is dependent on the bond amount. If you opt for a smaller surety bond, your premium will be smaller and your bond might not require a credit check. However, if you choose a larger coverage option, your bond will need to be underwritten. This means that your credit is evaluated to determine the amount of risk you pose to the surety.
When choosing your bond amount, consider not only the number of employees you have but also the cost of the bond premium and the consequences of claim payouts. Should a claim be made against your bond, and proven, you’re on the hook for reimbursing the surety company. That means if a $10,000 claim is paid out, you have to pay it back in full to the surety.
Benefits of business service bonds
Since business service bonds are not required by any government agency or laws, businesses obtain them voluntarily. This serves as a message to customers that the business has taken an extra step to protect them from any financial damages at the hands of employees. If you purchase this bond, don’t be afraid to advertise it to your customers�maybe you can say your business is “licensed, bonded and insured,” provided all three labels apply.