Exploring The Benefits Of Fiduciary Bonds
As a construction contractor, you likely understand how erratic the market can be. When things are going good, you will know it and will want to take full advantage of the opportunities available to you. Unfortunately, things can turn for the worse at any moment. With this in mind, it is absolutely essential to prepare for the worst-case scenario, before it arrives. One of the best and most effective ways to do this is by purchasing a fiduciary bond. Below, you’ll learn all about the benefits of this type of bond!
What It Is
Before you get into all of the benefits associated with this type of bond, you should take the time to learn exactly what it is! A Fiduciary bond is actually a type of insurance, which can protect your business from all different types of problems, including fraud and embezzlement. The bond helps to ensure that the person you put in charge to act on behalf of your business’s interest will fulfill their duties and will remain honest and faithful. In some cases, these bonds are used as a way to ensure that taxes or debts are paid in full.
3 Parties Involved
You should also realize that you’re not the only party involved in this equation. There are three parties involved and they are all responsible for upholding their end of the deal. For your consideration, these three parties will be explored in more depth below.
- The obligee is the individual or entity, which desired the bond as a guarantee
- The principal is the individual or entity that is seeking to obtain the bond
- Finally, the surety bond company issues the bond
By obtaining this type of bond, as the obligee, you will be able to keep the principal honest, at all times.
Keeping The Principal Honest
The majority of construction contractors will use a third party accountant or advisor to manage their finances. This is usually safe, but a fiduciary bond can help to keep them on the straight and narrow. If you discover that the accountant, or principal, has behaved illegal and has committed fraud, you will be able to file a claim against them! The bond’s backing can be used to help you recover the damages and losses incurred. This will encourage the principal to remain truthful and trustworthy, during their time with your business.
Ensures Professional Behavior
Everyone relies on individuals that are employed in a bank, probate, or other financial institution. In order to ensure you that the employees will carry out their job duties professionally and responsibility, a fiduciary bond is enacted. These bonds not only ensure you as an employer that the employee will act accordingly, but it will also protect your clients from financial loss.
Per Individual Request
Individuals that are facing bankruptcy, divorce, or a probate hearing can request a fiduciary bond. There are some instances where this type of bond is required and must be initiated by the client or customer. A bond company will complete a full background and credit history check on the trust advisor involved in your specific case.
Get Your Fiduciary Bond Now
When it comes down to it, almost any business can benefit tremendously from a fiduciary bond! This is especially true, when it comes to construction contractors. If you want to protect your business from fraud and embezzlement, you’ll want to purchase a fiduciary bond from us immediately!