Protect Your Miami Business With Surety And Fidelity Bonds

If you’ve got a business in Miami, there’s more to the insurance game than the mandatory liability and worker’s compensation coverage. Through surety and fidelity bonds, Miami businesses can insure against unforeseen financial disasters such as the intentional mismanagement of resources by a company employee or the collapse of a profitable project due to contractor failure. Sounds pretty good, right? Of course, no savvy business owner is going to jump to a conclusion, so let’s start at the beginning with a couple of basic questions: What are surety and fidelity bonds, and what exactly are they used for? Surety & Fidelity Bonds Both surety and fidelity bonds are issued by bonding or insurance companies, and as they both offer a kind of insurance against financial loss within specific circumstances, many people mistakenly use these two terms interchangeably. However these two insurance bond types are actually very different in what they insure against. Businesses use surety bonds to ensure financial compensation in the event of a default in services, monetary debts, or financial or contractual obligations. Fidelity bonds, on the other hand, are used to guarantee reimbursement of financial losses resulting from employee fraud, theft or dishonesty. Many businesses in Miami purchase blanket fidelity bonds, which cover multiple employees. Qualifying For Surety & Fidelity Bonds In order to qualify for either surety or fidelity bonds, businesses must submit to a two part verification process. To begin with, the insuring or bonding institution will assess your company’s reputation within the industry, current financial statues, and capacity to fulfill present and future business obligations. To accomplish this, the reviewing agents will typically require education and work history on company owners and any specific employees for which you are seeking coverage, an outline of your company employee and management structure, and a business plan detailing the type of business your company engages in, future growth and financial goals, and a practical continuation plan to be put into use should you die or become unable to run the company yourself. A project portfolio and written recommendations from industry peers and associates are not required but do assist in building a positive image of your company’s reputation and ability to perform. Once you’ve successfully moved beyond the initial assessment phase, you will be asked to provide the insuring or bonding agency with financial statements going back three years, which have been audited and approved by an independent certified accountant. Depending on the type of business you operate in Miami, surety or fidelity bonds may be required by law. Company employees in charge of certain aspects of management dealing with finances may also be legally required to be covered by a fidelity bond. For example, the Federal government requires employees who deal directly with retirement funds to be covered by a fidelity bond. The type of bonds required for your business, and what they specifically cover, varies from state to state, so be sure to look into the regulations regarding surety and fidelity bonds within the state your company is licensed to do business in.