Surety bonds are often misunderstood both by the business who needs a bond and the person or entity trying to make a claim against one! We’ve highlighted the top three surety bond myths to help you understand how surety bonds work:
Surety bonds and insurance are the same thing
This is one of the most common misconceptions about surety bonds. It’s easy to see why this myth came to be as surety bonds are often discussed as a form of ‘insurance’. Surety bonds provide a method for wronged parties to claim financial compensation for a loss caused by the business covered by the surety bond. Depending on the type of bond the claimant may be another business, an individual, or even a government agency. The surety bond does not protect the business that purchases the bond. In fact, they’ll be required to repay all costs incurred by the surety bonding company to pay a claim made against the bond.
You can’t get a surety bond with bad credit
While it is a myth that you can’t get a surety bond if you have bad credit, there is some truth behind this myth. If you’re one of the unfortunate people who’ve been turned down for a surety bond you’ll understand why people might think this is true! So what is the truth behind the myth? Well, your credit score does affect your ability to get a surety bond in two ways: who’ll issue you a bond and how much the bond costs. It is true that not all sureties will underwrite bonds for people with bad credit, however, there are many that will! So just because you were turned down by one doesn’t mean that you’ll be turned down by all of them. In fact, Viking Bond Service works with people of all credit scores to help them secure the surety bond they need at an affordable price.
You only need one surety bond to cover all US states
Although it might seem like acquiring one surety bond should cover your business to operate anywhere in the US it actually doesn’t. So what’s the reason behind this? It’s actually pretty simple, each state has its own rules and regulations that determine who needs a surety bond and how much that surety bond should cover. If your business operates in more than one state you’ll need to take out a bond in each of these states if their laws require you to do so.
The team at Viking Bond Service has many years of experience helping businesses across the US secure the right bond for their needs. Use our online application form or call our team today to find an affordable bond.