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surety bonds

Blanket Building and Construction Bonds

September 20, 2019 By Flor Caballero Lynch

building-2762319_960_720If you live in the City of El Paso, Texas and conduct construction projects within the city as part of a business, you are probably familiar with El Paso Municipal Code 18.02! This code requires that all those who are engaged in construction projects get a Blanket Building and Construction Bond for $25,000 before the municipality of El Paso will give a contractor a permit for construction!

This applies to just about all types of building construction in El Paso—if you are involved in new commercial/residential construction projects, any types of renovations, or additions in El Paso, you will definitely need a Texas City of El Paso Blanket Building and Construction Bond! A Blanket Building and Construction Bond is a type of surety bond that protects clients of builders and renovators, and works much like a surety bond!bulldozer-2195329_960_720

If you’re involved in other projects such as lighting, signage, and fencing, you may require a $10,000 bond as well—so if you are unsure with what you will need and how to apply, you should speak with your insurance agent to assist you with the process and how it all works!

Filed Under: Insurance Tagged With: blanket building, blanket insurance, bonds, contractor, insurance, surety bonds

Why Contractor Bonds and Employee Dishonesty Bonds are Important

September 13, 2019 By Flor Caballero Lynch

architecture-1836070_960_720Did you know that Contractor Bonds, and Surety Bonds in general, are usually described as a line of credit, rather than insurance? The reason why is that if you have a claim against your Contractor Bond you will have to pay the surety company back, in full, for the amount paid out!

In many states upon getting a contractor’s license, contractors will need to get a license bond from a surety bond company. This bond is an agreement among the contractor, the state licensing agency/board, and the surety company that will place certain conditions on contractors to make sure that they obey all state and federal laws and regulations for contractors!

In contrast to Contractor Bonds, Employee Dishonesty Bonds are not required by law, but any business can, and should get one of these bonds as an added protection for their business! An Employee Dishonesty Bond is a type of bond that protects your business from dishonest acts by your employees. This includes protection against fraud, embezzlement, forging checks, stealing money or merchandise, and so forth.

I knew a woman who owned a very nice café and found out that one of her longtime employees had been stealing money over 3 years to the tune of $15,000! She was cup-2884058_960_720completely dumbfounded, and instead of being mad and worried about her finances she only was just disappointed in her employee more than anything since she knew that she had coverage to protect against this exact scenario! She was able to make a claim, and later said she was glad she was able to have a quick and easy resolution to such a horrible problem!

Filed Under: Insurance Tagged With: agent, cafe, contractor, coverage, insurance, surety, surety bonds

Payment and Performance Bonds—What Are They?

September 6, 2019 By Flor Caballero Lynch

woman-1455991_960_720If you are a contractor and need to get a Payment and Performance Bond it is extremely important you speak with your insurance agent! With a lot of projects that are done for the state or federal governments—you will find that these types of surety bonds are required to be able to undertake the project!

A Payment Bond is a type of contract surety bond which guarantees that a contractor or subcontractor will pay their subcontractors, suppliers, as well as laborers for their work and all materials provided! A Performance Bond is another type of contract surety bond which guarantees that a principal will fulfill their contractual obligations within a project! Reason why is the government wants it done right, and wants contractors to pay their laborers properly!

My cousin is a contractor and told me about a project he did for a school district—he construction-19696_960_720needed to have both Payment and Performance Bond insurance just to build a single (But pretty expensive) retaining wall for a new school! He was telling me if the project is over a certain amount of money that you have to have these types of coverages, he mentioned that the “Miller Act” is the reason for this and places the threshold at $100,000 for federal projects. I also found out that in Texas the “Little Miller Act” applies to any state project—no matter the cost!

Filed Under: Insurance Tagged With: agent, contractor, coverage, insurance, surety, surety bonds

Surety Bonds vs. Insurance

July 5, 2019 By Flor Caballero Lynch

plumbing-840835_960_720-2I remember a story of a plumber losing their bond to a client that had their water heater pipes worked on by him. The plumber did not put a simple o-ring on a pipe he was replacing and ended up causing massive water damage to the inner walls of the house! The bond was paid out, the plumber was extremely distraught, and became even more so when he received a call from the bond company about how he was going to pay them back! If he had a General Liability plan with a Plumber’s Liability policy attached, he would have only paid his deductible and the client probably would not have made a claim on his bond!

The advantage to bonds is that they can really help customers feel at ease when working with you—and depending on your business may be required by law. But you must construction-2578410_960_720consider that if a claim is made against a bond and paid out to the claimant, the bond company will pay the person making the claim and then will turn around and ask you to pay them right back! This is different than General Liability since Surety Bonds do not protect your company and work against accidents or property damage like insurance coverage would, bonds are only are paid out when a legitimate claim is made against them!

Bonds are a very useful tool and are sometimes required by law depending on the business—but if you have the choice between a bond and insurance, it is wise to consider both sides of the coin!

Filed Under: General Liability Insurance, Insurance Tagged With: general liability, general liability insurance, insurance, insurance coverage, surety bonds

How Sureties Are Carried Out

July 20, 2018 By Flor Caballero Lynch

Say you did mess up (God forbid), you didn’t pull through on time, the project didn’t pan
out as it should’ve, or negligence happened— then your bond will be at risk if a claim is placed against it! club-2492011_960_720

If they do file a claim, then the claimant finds out who issued the bond and they contact the bonding company to file a claim. The company then receives, responds, and investigates the claim to find out if the claim is truly valid— if the bonding company finds that the claim is invalid then no further action is taken, but if it is valid the bond amount will be paid out. You may think that they won’t pay out to a claimant, but they do since they are bound by law to be impartial and pay out when warranted!

justice-2060093_960_720If the principal is paid out, then you will be on the hook for the amount and the bonding company will then demand the money from you! It is always extremely important to treat surety bonds with respect and to always carry out the commitments that are promised by them!

By Aaron Young

Filed Under: Business Insurance, Insurance Tagged With: bonded, bonds, business bond, business insurance, insurance, insurance coverage, surety, surety bonds

Top Mistakes Made When Buying Surety Bonds

July 13, 2018 By Flor Caballero Lynch

Surety Bonds can get confusing, but honestly don’t let it get in the way of using your decision-1697537_960_720noodle and seeing that it’s not as intimidating as it seems! These 3 mistakes are what I have found to be the most common:

Mistake #1 Getting the Wrong Bond Amount

It is always the buyer’s responsibility to double and triple check the exact bond amount before taking out a surety bond! The reason you want to get this right the first time is because the bond will be rejected when it is submitted with the wrong amount, and you will have to do the process and pay the premium a second time! Not fun!

Mistake #2 Getting a Surety Bond Through Unsavory Sureties

mistake-876597_960_720It happens, there are those rare few stories out there about how obligees have been victimized by an unsavory (Usually unregistered) surety. But to make sure that you are always getting what you agreed to, always do business through reputable agents, make sure that they are registered with the state by talking with your state insurance commissioner or by verifying membership through one of the various national surety bond associations just to make sure!

Mistake #3 Not Buying the Surety Bond Before the Given Deadline

Just as the title says, always be punctual and get it done on time! time-481444_960_720Otherwise you will have to do the process again and possibly face judgment! Just like those nightmarish days in college, deadlines do matter!

In sum, always do your homework and don’t be afraid to ask questions! As I mentioned before, mistakes do happen— but be proactive and you can avoid them!

By Aaron Young

Filed Under: Insurance Tagged With: bonds, insurance, insurance coverage, surety, surety bonds

Why Would A Normal Consumer Need A Surety Bond?

July 6, 2018 By Flor Caballero Lynch

Say you bought a sweet 69’ Camaro out of state and the guy you bought it from lost the title years ago (Or pocamaro-rs-1253606_960_720ssibly is a title-jumper, who knows!), and you thought— what the heck, I’ll see what I’ll have to do, I really want that car!

After you do a bit of research you discover that you will need to get a “bonded title” through a surety company. Reason being is the state needs to have some sort of promise that you own the vehicle, and to keep dated and proper documentation of a previously untitled vehicle on hand in case it turns up stolen!

reception-2507752_960_720
I wish the DMV was always this empty

After you get the Surety Bond based on the value of the vehicle, you submit the bonding documents to the state DMV and acquire your new bonded title, with the car now 100% in your name!

There are some practical uses to Surety Bonds and shows that they have a much different role than a regular insurance plan!

By Aaron Young

Filed Under: Auto Insurance, Insurance Tagged With: bonds, car, dmv, insurance, surety, surety bonds

Surety Bonds

July 2, 2018 By Flor Caballero Lynch

What is a surety bond? Say you opened a business in commercial contracting and you have to get bonded according to your state’s regulations.building-2762319_960_720

You may be asking, why do I need this? This surety bond is enacted so a consumer can do business with a qualified contractor with some piece of mind—which the government wants to help negate risk to facilitate the local economy. If a contractor does not do his job correctly due to negligence or malice (Say they are lazy and decide to cut corners, or did not live up to contract terms), then the customer can file a claim against the bond since the underwriter guaranteed their work!

binding-contract-948442_960_720The difference between this and an insurance plan is the company that bought the bond cannot make a claim against it! Surety bonds are usually made to protect the customer as well as the bonded company in higher risk business scenarios and in situations, but if you are the bonded party and do lose your bond, the surety company will be expected to be reimbursed in full! The surety buyer’s protection is very short lived!

By Aaron Young

Filed Under: Business Insurance, Insurance Tagged With: bonded, contractor, insurance, protection, surety, surety bonds

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4420 N. Mesa St
El Paso, TX 79902

(915) 996-9799
FAX: 1-866-514-3064

flor@florinsurance.com
www.florinsurance.com

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