Surety bonds are not insurance and do not protect you against liability. Instead, they function more like a type of credit. If a bonded contractor fails to perform under its contract or fails to pay its subcontractors and suppliers, claims can be filed against the surety. While the surety will pay valid claims, the contractor will be responsible for paying the surety company. If they fail to do so, the surety company can pursue legal action against the contractor to recover what it is owed.
Contractor’s Perspective
From a contractor’s perspective, surety bond premiums are a necessary expense in the initial stages of the contract. If bids are to submitted and contracts awarded, then the contractors must pay premium payments upfront. The government hopes that this charge serves as a deterrent to dishonest practices. In reality, would-be contractors may avoid participating in government contracts because they don’t want to make the upfront investment, even if they are willing to meet all requirements of a bid when awarded.
Agriculture Business
An agricultural bond is a surety bond that represents a contract between several different parties. The agriculture business the principal, or the party that required to hold the bond. The state or federal organization requiring the bond to in place known as the obligee, and the surety company provides the bond itself. Not all bonds fall under this category; agricultural bonds only those that required by specific agencies or states. Those that have approved can receive crop insurance or farm subsidies, and sometimes loans from various banks. Therefore, it is in every agricultural business’s best interest to work with a surety agency that specializes in agricultural bonds.
Agricultural Bonds Virginia issued by insurance companies and are financial guarantees, usually required by banks and other financial institutions. They act like a type of “insurance” to cover damages caused by essential mistakes of the farmer. Agricultural bonds run both as a personal obligation and property, assigned by the Department of Agriculture.
The price you pay for your bond depends largely on two things – how much risk the surety sees in insuring you and the size of your bond. The larger the bond, the more risk there is in insuring you and vice versa. For example, if your business is new and hasn’t been operating for long, you’ll likely have to purchase a $50,000 bond as opposed to a $100,000 bond. The reason behind this is that it behooves the insurance company to insure a lower volume business with smaller policies.
Conclusion
While, generally speaking, surety bonds not utilized in agricultural industries, there situations when some type of bond required. Agricultural bonds include those required for attorneys, farmers and ranchers who apply for licenses or permits. That may affect their business practices or impact future opportunities. If you wondering how to get bonded via Agricultural Bond Virginia, then you have come to the right place. First of all, make sure that there is a need for it. Whether you’re talking about agricultural bond costs or if they can lowered, it will not matter. If a business owner in the industry has failed to comply with any of the state licensing and bond provisions.
