When you’re working to get your financial ducks in a row, the last thing you want to worry about is whether those you are working with will take advantage of you. Knowing that you’re working with reputable and reliable professionals can relieve the stress of the unknown-especially when considering your finances. Surety bonds can help provide this relief.
How Surety Bond Protection Works
Surety bonds act as legally-binding contracts that require certain professionals, businesses and other entities to perform their duties according to an appropriate standard. Major industries across the board continue to set stricter bonding regulations to guarantee the work done by their professionals-especially those who provide a service to the public.
A professional or business typically gets a surety bond to guarantee the quality of the service to be done in the future. As a legally-binding contract between three parties, surety bonds offer an enforceable financial guarantee to those who might be wary of letting others handle their funds. Surety bonds are utilized in virtually all industries and markets, and even professionals who aren’t required to be bonded can purchase a bond as a show of good faith.
Bond protection for professionals working with your finances
- Mortgage broker/banker/lender bonds protect clients against dishonest lending practices, such as convincing clients to commit fraud while applying for a mortgage, choosing to approve borrowers for loans they will not be able to repay, and charging unnecessary or additional fees, among other unethical decisions. Bonded mortgage specialists who choose to engage in these activities leave themselves vulnerable, as the bond will hold them accountable for paying reparation to any harmed parties who make a claim on the bond.
- Insurance broker bonds guard consumers from brokers who use inappropriate selling tactics like inflating or falsifying quotes to increase profits, as well as convincing consumers to purchase unnecessary insurance products. These bonds also protect the companies that work with brokers to ensure that the company receives appropriate payment for the products and services it provides to the broker.
- Collection agency bonds compel agencies to properly manage the money received while pursuing outstanding debts. They also guarantee that funds are distributed to the appropriate company holding the outstanding debt, less any collection fees previously approved. If the collection agency misappropriates the funds, the obligee usually files a claim on the bond. Then the agency will have to pay compensation to the harmed party up to the bond’s full amount. If the agency does not have the ability to do so, the surety will be held accountable to a certain extent.
- Tax collector bonds act as safety nets for the government agencies when tax specialists fail to fulfill their duties as outlined by law. Such duties include billing, collecting, reporting, and enforcing tax statements and payments. Tax collector bonds assure the public that their local government is working to provide the public with ethical and comprehensive tax collection services.
- Money transmitter bonds guarantee businesses that send money from one location to another via the U.S. Federal Reserve banking system follow all licensure and operation regulations. Most states require surety bonds for any business that remits or transfers money. Bonds are a necessary expense for every wire transfer operation, and along with this cost comes the assurance for consumers that their money is transferred correctly.
- Patient trust bonds make sure assisted living centers and nursing homes properly manage their patients’ finances. These bonds also guarantee that, when necessary, the money is used to make payments to third parties in an appropriate and timely manner. Most jurisdictions require such long-term care facilities to purchase patient trust bonds before being allowed to legally operate, which works in the best interest of patients and their families.
Verify bonded status before entering into financial arrangements
Checking the bonded status of the those you work with is an easy way to ensure that you are trusting a reliable and financially-sound professional. Surety bond companies thoroughly inspect an applicant’s work, credit, and financial history, as they prefer to work only with stable professionals who are unlikely to break the bond’s contractual language. Furthermore, if something does wrong during while the individual is handing your funds, you can rest assured that bonds provide ample financial protection for unfortunate situations. For more information on surety bonds, see the surety bond definition at our site or search to find one of the many other sources of information on the web. A little knowledge of surety bonds can go a long way in protecting your biggest investments.
About the author. This is a guest post by Chris from SuretyBonds.com, an agency that offers over 25,000 surety bond types to businesses and professionals in all 50 states. Follow the agency on Twitter @suretybond.