What is a Surety Bond?
When you become bonded for a job, you must apply for a surety bond. A surety bond is much like an insurance policy. This bond insures that if the contractor, who is the bonded party, is for whatever reason unable to fulfill the obligations agreed upon in the contract, the customer or client will be recompensated. The bond also guarantees that if the customer or client suffers any type of loss due to the contractor’s negligence, they will be reimbursed. For example, if you work for an office cleaning company and accidentally spill a pail of water that damages the carpets or furnishings, the bond ensures that the necessary repairs or replacements will be made: If not by you or your company, then by the surety company.
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Do I Qualify to Become Bonded for a Job?
While most people can become bonded for a job with no problem, there are some factors that can prevent you from being bonded. For example, if you have a criminal history or even poor credit, you may have trouble finding a surety company that is willing to bond you. In order to qualify for a surety bond, you should be able to display financial responsibility. When becoming bonded for a job in which you are an employee as opposed to an independent contractor, the surety company is likely to be more concerned with the business’s credit history and financial stability than your own, as the business will be the ones responsible for any loss or damages for which you are responsible. You may be asked to provide personal and business references, as well, to show that you are a person of integrity and honesty.
What is the Bonding Process?
The first step to becoming bonded for a job is finding a surety company. Your employer may provide one for which they want you to complete an application. If not, check your yellow pages, contact insurance companies for referrals or search “surety bonds” online to find options.
Once you have selected a surety company, you will need to complete a surety bond application. The application will require several types of information, such as:
- Personal information. You will be asked to include your name, address, social security number, business name and business address. You may also be asked to provide any other names by which you have been known, such as your maiden name, and your spouse’s information, if applicable.
- Financial information. You may be required to permit the surety company to pull a copy of your credit report. If you are a business owner, you will need to submit financial information for yourself and the business, as well.
- Background information. You will be asked whether you have any type of criminal history. It is important to be completely forthright regarding this information, as the surety company will perform a background check on you. Depending on state laws, the surety company’s policy and the type of crime, a criminal record may not preclude you from becoming bonded for a job. Being upfront and honest shows your integrity, while trying to hide a less-than-spotless past may mean an instant denial.
- Other information. The surety company may request names and contact information for personal and business references. Depending on the type of job and other circumstances, you may be asked to provide information for the client and contract for which you want to become bonded.
Once you have completed the bond application, send it back to the surety company with the appropriate application fee, which is typically between $100 and $250. Most surety companies request that you remit payment in the form of a cashier’s check or money order, so be sure to read the fine print. After sending in the application, all you need to do is wait. It may take several weeks to become bonded, as the surety company needs time to run background checks and retrieve your credit information. The surety company will contact you once your bond has been approved.