Archive for Bonds
Asbestos and Lead Paint Abatement Bonds
Contractors that work on public projects are required to provide surety bonds. Carriers that specialize in insuring asbestos and/or lead abatement contractors have expanded into the field of surety bonds for these contractors because they understand their exposures. Specialized surety companies that concentrate on environmental bonds include:
Bankers Blanket Bond : High Limits
The Excess Bank Employee Dishonesty Bond provides high limits bankers blanket bond coverage. This bond is written over Financial Institution Bond-Standard Form No. 24’s underlying limits. The excess bond protects banks against catastrophic employee dishonesty losses. The standardized excess blanket bond is Excess Bank Employee Dishonesty Bond-Standard Form No. 28. There is no specific formula to determine adequate limits for a given financial institution, but one guideline used is average deposits value
The United States Customs Bureau requires that an importer secure a bond to guarantee that it will pay all duties on goods brought into the country. Shippers must secure open customs bonds that cover shipments on a continuous basis. Bonds for single shipments are equal to the value of the goods and include applicable duties and fees. Related to customs bonds, Non-Vessel Owners Common Carrier (NVOCC) bonds and freight forwarders bonds for importers and exporters are required by the Federal Maritime Commission and protect exporters for their cargoes while being shipped.
Environmental Contractor Bonds
Bid and performance bonds for contractors engaged in pollution cleanup and other environmental work are available from specialty insurers. These bonds supplement the pollution liability, commercial general liability, and auto liability coverages available to these contractors. Surety limits are provided on a per-job basis and can be substantial.
Landfill Closure Performance Bonds
The Environmental Protection Agency (EPA) establishes requirements for owners and operators of non-hazardous waste landfills that require bonds. These bonds are written by surety companies that specialize in them and other miscellaneous bonds. The bond program for non-hazardous waste landfills is designed for municipal solid waste landfills and demolition facilities. The financial responsibility may be accomplished through bonding, insurance, letters of credit, or trusts. The terms of the bond require that the operator continue to monitor the ground cover and ground water and maintain the landfill for 30 years after it is closed. This bond guarantees that the operator will perform such monitoring and required maintenance.
Product Warranty Inefficacy Coverage
This is a highly specialized performance surety bond or guaranty insurance that was originally designed for investors or manufacturers of alternative energy sources. It provides financial protection if a system does not perform as engineered or designed. This type of insurance encourages investment and development of both alternative energy sources and other types of manufactured products.
Surety Bonds: Miscellaneous and Special Risks
Certain types of surety bonds that do not easily fall into natural and well-defined classifications are considered more difficult to place than normal bond classes. These are classified as miscellaneous bonds and collateral is required when they are written. Because of the frequency of use and the amount of premium volume, lost instrument or lost securities bonds are the most familiar of the class. Other types of miscellaneous bonds given special treatment by surety markets are income tax bonds, which are given to guarantee payment of federal income taxes due; subdivision bonds that guarantee that certain property improvements, such as streets, sidewalks, and sewers, will be constructed by a subdivision developer; bonds that guarantee the performance or long life of a certain product or service such as long-term guarantees of roofs and roofing materials; patent infringement bonds; blue-sky bonds; self-insurance bonds; and numerous other “once-in-a-lifetime” specialty bonds that require individual underwriting judgment.
Surety Bonds: Small Contractors
It can be difficult to find bond markets willing to write coverage on contractors just starting in business. A number of programs are available for contractors that have less than $500,000 in annual revenue. Coverage is available for performance, payment, and bid bonds for a variety of small and artisan contractors. Sureties examine the contractor’s stability as well as its financial management. After a few jobs are completed successfully and without default, these risks improve substantially and the account can grow with the agent, who usually also writes the contractor’s commercial general liability and commercial auto lines of business.
Third-Party Fidelity Coverage
Third-party fidelity insurance coverage is available to a variety of contractors that make regular service calls to homes and businesses. Examples are air conditioning and heating services, appliance and television repair services, burglar alarm installation businesses, maid and janitorial services, pest control services, and detective and security guard services. Computer service providers are also eligible for this coverage because their employees have access to their clients’ computers. This crime coverage, also known as clientâ€™s property coverage, protects both the service provider and its client from losses due to dishonest acts that the service provider’s employees commit.
Workers Compensation Self-Insurers Bonds
Special bonds are required of organizations that choose to self-insure their workers compensation exposures. They must apply to the state’s Workers Compensation Board, register to be a self-insurer, and post a bond that guarantees that claims will be paid.