What Is A Surety bond?

What Is A Surety bond?

A surety bond is a contractual agreement that involves three parties, namely the principal, the surety, and the obligee. It is a risk management plan primarily designed to ensure commitment towards an agreement in business practices. If you are a contractor, you may not be able to bid for or get some contracts without a surety bond. Also, as a business owner, a surety bond will be required in some legal claims and to obtain certain licenses.

Understanding the Three Parties In a Surety Bond Agreement

  1. The Principal

The principal is the entity (business or individual) in need of a surety bond as a form of guarantee for future work performance. A surety bond is used for different purposes, such as getting a business license, completing a court case, guaranteeing business protection, or completing a contract. If there are damages or a breach of contract on the part of the principal, the claims will be settled by the company that issued the bond.

  1. The Obligee

The obligee of a surety bond is usually a legal entity, such as government agencies. It is the entity that requires a surety bond from a business outfit before offering them a contract. This is in line with the Miller Act passed in 1935, which helps protect the public interest from local contractors. The surety bond will help reduce the likelihood of financial loss and ensure commitments to contractual agreement from the principal.

  1. The Surety

The surety is a risk management company (usually an insurance carrier or a bank) that is responsible for the bond payment if there is a damage caused by the principal. If the obligee files acclaim for damages, the surety will initially cover the cost. With that, the interests of both the principal and the obligee will be timely protected. Although, the full cost of the damages will still be fully paid back by the principal, but at a later date.

How Does a Surety Bond Works?

There are thousands of bonds in the US regulated by each state government. Amounts and requirements are dependent on what applies in a state. Surety bonds are broadly categorized into two types, namely contract and commercial surety bonds.

  1. Contract Surety Bonds

Contract surety bonds usually required by government agencies to serve two primary goals. It helps ensure that a contractor completes a project he undertakes. Also, it helps to ensure subcontractors are paid the agreed sum by the contractor. It has three major types, which are:

-       Bid Bonds: A bid bond is used when bidding for a contract. It is to show that your company is financially capable and has all the required resources to get the job done.

-       Performance Bonds: If you are choosing for the project, you will be required to present a performance bid to guarantee satisfactory completion of the project. In case of failure to complete the job as agreed, the surety company will be held responsible for the completion.

-       Payment Bonds: If all things went as planned and the project is completed, then you will need to pay your subcontractors. A payment bond is to ensure that all parties that worked on the projects are as agreed.

  1. Commercial Surety Bonds

There are thousands of bond types under this category, and each is named after its purpose. They are mostly required in license or business registration, or legal cases. Examples are License and Permits Bonds and Court Bonds

 

Business Owners Insurance Policy

Business Owners Insurance Policy 

A business owner policy (BOP) is a unique insurance type designed to protect major physical assets of a business, and also cover the business against liability risks. Business owner’s policy is sold is offered by property and casualty insurance companies and offers multiple types of coverage. Depending on the degree of physical damage to a commercial property or lawsuit from injured third-party, some events are capable of bankrupting your business, if you lack reliable adequate insurance coverage.  As a small or medium-sized business owner, your needs for business owner’s insurance cannot be overemphasized.

Why Do I Need Business Owner Insurance Policy?

Business owner policy has two packages combined in one policy, as it covers both commercial property and general liability. Damage to property and equipment, a lawsuit from third-party, and lack of working capital are three major factors that mostly affect the general performance of a business. These three crucial factors are what business owner policy covers as follows:

Commercial Property Insurance

Commercial property insurance protects your business against any damage to its physical assets due to vandalism, theft, fire or any kind of accidental damage. Your commercial building, equipment and fixtures are some of the properties generally covered by this product.

Liability Insurance Protection

Liability insurance covers any legal responsibility your business is held for as a result of harm done to others. This could be financial loss, bodily injury or property damage to third-person as a result of the failure or errors from your business activities.

Business Interruption Insurance

 If regular business activities are interrupted as a result of mechanical breakdown, fire or vandalism, theft or a covered disaster, a company without a reliable financial protection may be forced to slow down or stop operations. With business interruption insurance, the effects will be mitigated, and your company will be well protected. The coverage usually includes the income lost for that moment of interruption and the extra cost of operating from a temporary location.

How to Get a Business Owners Insurance Policy

Before buying a business insurance policy, the following are some of the things you need to consider:

Eligibility Criteria

As with other insurance types, BOP eligibility is determined by specific criteria, depending on the company and the product. Generally, for a business to be qualified, the requirements include:

-          Having less than 100 employees

-          The building size must not exceed 100,000 square feet or six  stories if it is an office

-          The building size must not be larger than 35,000 square feet if it is for wholesale, mercantile, or processing

-          The annual revenue must be more than $1 million

-          The business must be in a low-risk industry.

Talk to a Business Insurance Broker

Just like every other important financial decision, you must do your due diligence and grasp the concept of how BOP works for your business line. An insurance borker, preferably, an expert in the business insurance policy will help you have a better understanding of it and guide you on how to buy and make the most of your business owners policy.

Free Businessowners Policy Insurance Quotes

To save money on your business insurance policy, call Safepro Insurance Services and speak to a commercial insurance broker.

Builders Risk Insurance Explained

Builders Risk Insurance Explained

Builders Risk Insurance, which sometimes referred to as Course of Construction or Inland Marine Coverage, is a special type of property insurance. It is designed to cover a building that is currently under construction. Its coverage can be just for the building, or with other materials meant to be used for the construction; either at the construction site or at off-site storage locations and in transit.

Builders risk insurance policy can be purchased for either residential or commercial building project. The definitions of “residential” or “commercial” however, varies among the policy providers. For instance, some insurance companies may define a residential building as a family home for 1 to 4 numbers of occupants.  A commercial project could be anything from the shopping complex, office buildings, and sports arena. The policy is usually provided for three kinds of construction projects, namely:

-          Ground-up new construction;

-          Remodelling; and

-          Installation

How Does Builders Risk Insurance Work?

Just like every other insurance type, the builders risk insurance risk policy is a risk management financial plan, which pays for damages up to the coverage limit. The policy term could be for 3months, 6months, or 12 months, depending on the size of the project. In the event that the project isn’t completed when the policy expires, you can negotiate with your policy provider for an extension.

What Does Builders Risk Insurance Cover?

Damages from events such as fire, wind, explosion, vandalism, hail vehicles, are often covered by the policy. In some cases, limited coverage may be made available for building collapse. Comprehensive coverage may also include damages from events like earthquake, war, weather to property, mechanical breakdown, flood, and theft.

Keep in mind, however, that liabilities from injuries and accidents, and professional liability are excluded from the coverage. You may get stand-alone liability insurance for this purpose. Also, if you have subcontractors working on the same project, they will need to get their own insurance separately. The policy coverage is restricted to the building it is purchased for, and will not cover property belonging to other people.

Who Needs Builders Risk Insurance?

Builders risk is a crucial insurance policy that is essential for those who are into building construction. Having it will significantly help in averting potential financial loss from common damages in building construction. It will also help protect your reputation as a builder. You will most likely need builders risk insurance if you are a:

Builder

Contractor

Homeowner or property owner

Development or investment company owner

House flipper

How Much Builders Risk Insurance Do I Need?

There’s no one-cap-fits-all to this. The budget for the building will determine how much policy you will need.   Generally, builders risk insurance price ranges from 1% to 4% of the total construction cost. The exact policy amount will depend on the number or the kinds of items you want the policy to cover. While you will want to be prudent with your budget, it is essential not to leave out crucial aspects, including soft costs of the project. This will guarantee adequate coverage when the need arises. When shopping for a builders risk insurance policy, do ensure that you patronize a reputable insurance company that will guarantee a prompt response to your claims.

In order to receive a quote on builder’s risk insurance, please click on the following link:

https://www.safeproinsurance.com/forms/docs/Course-of-Construction-Application-spi.pdf

 

 

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Business Owners Insurance Policy

Business Owners Insurance Policy 

A business owner policy (BOP) is a unique insurance type designed to protect major physical assets of a business, and also cover the business against liability risks. Business owner’s policy is sold is offered by property and casualty insurance companies and offers multiple types of coverage. Depending on the degree of physical damage to a commercial property or lawsuit from injured third-party, some events are capable of bankrupting your business, if you lack reliable adequate insurance coverage.  As a small or medium-sized business owner, your needs for business owner’s insurance cannot be overemphasized.

Why Do I Need Business Owner Insurance Policy?

Business owner policy has two packages combined in one policy, as it covers both commercial property and general liability. Damage to property and equipment, a lawsuit from third-party, and lack of working capital are three major factors that mostly affect the general performance of a business. These three crucial factors are what business owner policy covers as follows:

Commercial Property Insurance

Commercial property insurance protects your business against any damage to its physical assets due to vandalism, theft, fire or any kind of accidental damage. Your commercial building, equipment and fixtures are some of the properties generally covered by this product.

Liability Insurance Protection

Liability insurance covers any legal responsibility your business is held for as a result of harm done to others. This could be financial loss, bodily injury or property damage to third-person as a result of the failure or errors from your business activities.

Business Interruption Insurance

If regular business activities are interrupted as a result of mechanical breakdown, fire or vandalism, theft or a covered disaster, a company without a reliable financial protection may be forced to slow down or stop operations. With business interruption insurance, the effects will be mitigated, and your company will be well protected. The coverage usually includes the income lost for that moment of interruption and the extra cost of operating from a temporary location.

How to Get a Business Owners Insurance Policy

Before buying a business insurance policy, the following are some of the things you need to consider:

Eligibility Criteria

As with other insurance types, BOP eligibility is determined by specific criteria, depending on the company and the product. Generally, for a business to be qualified, the requirements include:

-          Having less than 100 employees

-          The building size must not exceed 100,000 square feet or six  stories if it is an office

-          The building size must not be larger than 35,000 square feet if it is for wholesale, mercantile, or processing

-          The annual revenue must be more than $1 million

-          The business must be in a low-risk industry.

Talk to a Business Insurance Broker

Just like every other important financial decision, you must do your due diligence and grasp the concept of how BOP works for your business line. An insurance borker, preferably, an expert in the business insurance policy will help you have a better understanding of it and guide you on how to buy and make the most of your business owners policy.

Free Businessowners Policy Insurance Quotes

To save money on your business insurance policy, call Safepro Insurance Services and speak to a commercial insurance broker.