New Jersey Business Surety Bonds
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Candace Jenkins is a licensed insurance advisor with over a decade of experience. She is also a writer and loves to write on all things insurance. Candace writes for TrustedChoice.com on a continuous basis and is here with the facts about all your insurance inquiries.
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Jeff Green has held a variety of sales and management roles at life insurance companies, Wall street firms, and distribution organizations over his 40-year career. He was previously Finra 7,24,66 registered and held life insurance licenses in multiple states. He is a graduate of Stony Brook University.
New Jersey has over 884,049 small business owners. If you're one of them, you may need a business surety bond. While sometimes unusual, business bonds are often necessary.
An independent insurance agent can help with policy and premium options. They work with several carriers, giving you the best deal in town. Connect with a local adviser for custom quotes.
What Is a Surety Bond?
A New Jersey surety bond is a contract between three parties. They are the principal, the surety, and the obligee. The three parties are explained in further detail below.
- Principal: The person or entity obtaining the bond
- Surety: The insurance company supplying the bond
- Obligee: The person or entity requesting the bond
The surety financially guarantees to an obligee on behalf of the principal. The principal will act by the terms established in the bond. A surety bond can be used for a variety of things.
What Does a Surety Bond Cover?
If your business needs a surety bond in New Jersey, you'll want to know how it works. Like every business policy you obtain, coverage can be confusing. Essentially, a surety bond exists to protect the obligee.
- Financial loss: Pays for financial loss if promised labor is not performed.
- Liability loss: Pays for liability in the event the work causes damage.
- Theft or fraud loss: Pays the obligee due to financial losses if one of your employees steals or commits fraudulent acts.
Your operation may need a bond to get a contract. In fact, many companies or government entities will only sign contracts with businesses that have a bond. This is because they don't want to take on the risk of a project being compromised.
How Much Does a Surety Bond Cost?
Like your commercial auto policy or general liability insurance, a surety bond premium will depend on various factors. Carriers use personal and outside data to determine costs. Check out some items that will impact your New Jersey pricing.
- The size of the job
- Your experience level
- Your cash flow
- Your financial records
- Prior losses
- If you've ever had a bond before
- Your assets
While every bond's cost will be different, the things that make up the premiums will remain the same. The type of job you need a bond for will have to be one the insurance company thinks you can deliver on. They will need proof of prior financials and more to guarantee your completion to another entity.
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Is a Surety Bond Insurance?
Your New Jersey surety bond is not the same as business insurance. It's important to know the difference, though it can be confusing. Surety bonds are a type of credit.
They are often mistaken for insurance. With a surety bond, the risk is always with the principal, not an insurance company or the surety. This is where it acts like credit. The principal is usually obligated to pay back the bond if things don't go as planned.
Types of Surety Bonds
In New Jersey and every other state, there are many different types of surety bonds. For almost every contract, license, or project, there is a surety bond. Here are a few common ones, but there are several more.
- Contract bonds
- Commercial bonds
- Auto dealer bonds
- Sales tax bonds
- Custom bonds
- Court bonds
- Fidelity bonds
Each bond type usually has a subsection of bonds within it. One of the most commonly used bonds in commercial insurance is a contract or commercial bond. These are often requested when you're a contractor or when you bid on jobs.
What Is a Surety Bond for Jail?
If you are arrested due to suspicion of a crime and have a trial date, you don't have to remain locked in a New Jersey jail. As long as a judge allows you to leave, you can pay the set bail.
This sum of money is deposited in court and can be obtained through a surety bond or bail bond. Hopefully, you won't ever have to use a bond for this, but it is an option. When you're low on funds and don't want to stay detained, you can look into a bond.
How to Get a Surety Bond
In New Jersey, business surety bonds may be needed for multiple reasons. There are numerous business policies your company could have, and coverage can be confusing. The help of a knowledgeable adviser can make all the difference.
An independent insurance agent works with multiple carriers so that you are presented with the best options. They do the shopping at zero cost to you, which saves money. Get connected with a local expert on TrustedChoice.com in minutes.