This bond provides financial resources for a business in the event of a loss. The main difference between a surety and a fidelity bond is that surety bonds are required by a third party usually the government to protect itself or the public, and fidelity bonds are insurance for the employer or business that protect a business from employee theft.
A fidelity bond insures the loyalty between the employer and employee. This bond will pay for any dishonesty on the part of employees. A surety bond is required insurance when dealing with the government or other similar regulatory agency.
There are a number of instances when a surety bond is required. Some industries request a surety bond for licensing as a safeguard that the applicant follows the rules and regulations. A surety bond ensures that the insured has the necessary skills and guarantees success. All construction projects for the government, both state and federal, require a surety bond from a contractor before being allowed to begin the project. The construction industry makes up the majority of the surety bonds, as contract bonds are approximately two-thirds of total surety bonds.
Commercial bonds prevent service professionals and businesses from taking advantage of consumers. There are some industries that need a surety bond, but the most typical requirement is on federal construction projects due to the Miller Act of Many states have their own laws that require surety bonds on contracts.
The reason that surety bonds are necessary on these projects is to protect the interests of the public and taxpayers. Because of high failure rates of companies and contractors in the construction industry, many private projects also require surety bonds on large construction projects. Several states require insurance professionals to be licensed and bonded to help protect individuals and businesses from being deceived and manipulated when seeking personal and property insurance.
Getting bonded attests to your professionalism and shows you were vetted by a surety bonding company. Poor credit scores, history of criminal activity and moral turpitude are among the reasons for being denied a surety bond. Surety bonds help protect the public. As part of the insurance application process, individuals must provide personal information. If that information is leaked or stolen, a consumer could find themselves a victim of identity theft.
Their sensitive medical conditions could also be inappropriately disclosed. Getting bonded also protects the interests of insurance agents and brokers in the event of unintended harm to a client such as the accidental release of personal data. In order for the company to get insurance, it needs to demonstrate it has not hired anyone who creates risk for the organization so it can recover if there is theft or loss to the company.
Many jobs may want you to be bondable. If you handle cash, sensitive company information, or client financial information, you may have to pass a background check and credit check. For those companies that have bonding insurance, when an applicant seeks a job, they will undergo a background check by the bonding company.
The check will be for criminal history and to verify references to establish the honesty of the applicant. Most insurance companies will not bond anyone with a criminal history , including arrest, conviction, or incarceration. As a result, many felons cannot be bonded. Felons are typically considered to be high-risk employees. Felons will have a great deal of difficulty with this process, which typically results in their not being hired for a position that requires bonding.
So what do felons do when they encounter these issues? The government recognized the issue that felons had and came up with an alternative that could be of great assistance.
The Federal Bonding Program was created to help qualified high-risk job applicants whose background, especially a felony, get another chance for employment. The bonds offered through this program are free for applicants and employers in any state.
Any employee, either full or part-time, can be covered for a six-month period. If you acquire coverage through the Federal Bonding Program, you can qualify for traditional bonding for life by demonstrating honesty on the job for the six months offered by the Federal Bonding Program. The Federal Bonding Program is designed for those who are:. To qualify for the Federal Bonding Program, a high-risk worker must:. This represents a reasonable alternative for felons seeking employment.
The Federal Bonding Program has had great success since its beginning and has helped reduce a return to prison for those who are enrolled in it. Of course you have to deal with a background check for almost everything you apply for since your conviction. How about the Federal Bonding Program?
Because you have a felony conviction, you are a high-risk employee. That makes you able to take advantage of the Federal Bonding Program.
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