Warehouse Bond
When an individual or business stores their goods in a warehouse, they do so to ensure your property is well-protected and will be available to them at a later date. They put a great deal of trust in the warehouse operator. Most states require warehouse operators to take out a warehouse surety bond to back up this position of trust.
What is a Warehouse Bond?
A warehouse bond, or a storage bond as they are sometimes called, is a risk-management device required by many states in the U.S. The bond ensures that the bonded warehouse operator will abide by all pertinent regulations to protect the property stored there. It creates a financial incentive and a mechanism for recovering damages.
Typically, the bond protects property owners from losses due to fire, water damage, theft, roof collapse, improper handling, and poorly maintained facilities. The bond does not cover damage due to unforeseen "acts of God," like earthquakes. However, a foreseen natural calamity, like a hurricane, may be covered if the bonded warehouse did not take appropriate precautions given the anticipated storm.
How Does a Bond for Warehouse Work?
A bond for warehouses, like any type of surety bond, is a legal contract between three essential parties:
- The Bond Principal is the person who is bonded, the warehouse operator.
- The Bond Obligee is the government entity that mandates the bond.
- The Bond Surety is the insurance company that underwrites the storage bond.
If a customer's stored property was damaged while warehoused, and they believe the damage was due to the operator's negligence or mishandling, they can file a claim against the bond. The surety company must thoroughly investigate all complaints. If the surety agrees the damage was caused due to the warehouse operator's care, they will pay the claim up to the total bond value. However, if they find that the damage was due to the customer's negligence or an act of God, the surety will dismiss the claim.
Who Needs a Storage Bond?
Many states require a storage bond from everyone who operates a warehouse or storage facility within the state. There is no nationwide requirement, and the bond values vary by state. If you run a storage facility, it is best to contact your state agency to learn whether you must be bonded.
If you are unsure whether you require a bond, the surety experts at Viking Bond Service will guide you through the process to find out.
How Much Does a Warehouse Bond Cost?
Like any surety bond cost, a warehouse bond cost is based on the bond amount and the principal's credit rating. The bond value is set by the state and may vary based on the size of the warehouse and the value of the stored merchandise. The bond premium is typically just a tiny fraction of the bond value, often 1-5%. Naturally, the better the principal's credit score, the lower the premium they pay.
How Can I Get a Warehouse Surety Bond?
Viking Bond Service makes it quick and easy to obtain a surety bond. Simply complete our online application today, and we'll send you a competitive warehouse bond quote ASAP. You're welcome to call us toll-free at 1-888-2-SURETY (1-888-278-7389). We look forward to being your surety bond partner.
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