Getting Bond Insurance in Philadelphia: Everything that you should know

Oftentimes people are confused regarding differences between the terms “bonded” and “insured.” There are, in fact, significant differences between being bonded and being insured. Insurance provides protection in case of an accident or a mishap, whereas a bond is more like added coverage. This just means that the payment will be made if certain conditions are not met. Data collected by the Insurance Information Institute revealed how many life insurers invest in bonds. According to the data, life insurers invested a total of 71% of their assets in bonds. However, this data does not take the separate accounts into the consideration.

Cramer’s rules for investing suggests that one should increase their investments as they age. Before we talk about the benefits, let’s get into the basics of bond insurance in detail.

What is bond insurance?

Bond insurance, also known as financial guaranty insurance, protects borrowers from defaults. Most issuers buy this because it reduces the tax amount to pay while simultaneously enhancing their credit ratings. This type of insurance coverage guarantees the repayment of the principal amount and the interest amount if the issuer defaults. It allows investors to save for the long-term plans and grow their business significantly.

Being bonded provides various benefits to businesses at different stages. If you are just starting, it will protect your business from risks that could potentially shut down operations. Nonetheless, it is crucial for owners at all stages of business ventures to take the necessary steps to protect themselves from losses and damages.

You can always seek help from a bonding company to inquire about Philadelphia bond insurance. Having insurance will protect you, and you won’t be at risk of incurring financial losses, one of the biggest benefits of having bonding insurance.

An issuer of a bond can purchase bond insurance to guarantee scheduled payments of interest and principal on the bond to its bondholders in case the issuer defaults. Once the issuer purchases bond insurance, its credit rating is replaced with the insurer’s credit rating. Premiums are a measure of the perceived risk of failure of the issuer and are paid to the insurer in either lump sums or installments.

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Benefits of different types of bonds

Being bonded gives insurers the ability to leverage business growth. With the increased stature of having the insurer’s credit rating, a business can feel safer in taking risks to improve and grow the business. This is especially true in the construction and financial industries.

A bonded business can obtain unbiased criticism from a credit professional and seek advice in underwriting projects.

Some bonds we handle include, but are not limited to, the following:

License and permit bonds​

Payment bonds

Miscellaneous bonds

Contract performance bonds

Bid bonds

Maintenance bonds

As an applicant, you may have questions regarding finding a reputable bond insurance agency. We encourage you to discuss these questions and concerns with us. At Remco Insurance Services, we prioritize customer satisfaction and ensure that all their questions have been answered by the time our work is done. Our experts will guide you and help you understand the differences—minute and significant alike—between each type of bond.