Those in the market for payment, performance, or other types of contract guarantees, will be interested to know that Talisman Casualty runs a surety program. Surety programs are an excellent way to make certain that your business can compete for the high value contracts through the use of a guarantor.
With this in mind – and with the expansion of credit as interest rates have remained historically low – we put together this guide to the 5 things you need to know, before building your company a surety program.
5 Things you Should Know About Talisman Casualty Surety Program
Surety bonds behave a little like credit financing, but the surety does not expect to experience a loss in contrast to an insurance product which assumes they will have losses. Here are a few other things you ought to know before you take one out for finance.
1 – Surety acts like Co-signatory Loans
The Talisman Insurance Surety Program grants you credit enhancement in the same way a co-signatory on a loan works. The provider grants a bond in exchange for premium and you will guarantee that if a loss is to occur and typically as a result of breaching a contract then the surety must cure the default. You will be expected to reimburse the surety for the cost of curing the loss.
2 – Bonds are Underwritten Like Credit
When you take out credit, the lender fronts the money on the understanding that you will pay it back. Bonds are underwritten in much the same way. You take out the bond in exchange for a much lower rate that you would have to repay a bank loan or other line of credit. This makes surety a valuable business tool.
3 – There are Different Types of Bond
There are many different types of bonds including payment bonds, performance bonds, legal bonds, licensing bonds, bail bonds, environmental bonds, custom bonds, supply bonds, and many others.
4 – Surety ISN’T Insurance
When you have a surety bond, you will be working closely with the firm who granted it to you rather than the arms length relationship that exists with most insurance. The Surety will typically have the same contractual rights as their insured principal including completely stepping into their principals shoes to enforce the contract.
5 – It Fits the Captive Insurance Model Better
Surety programs offered by captives insurer like Talisman can be much more valuable to a business than chasing the best rate. Since there are less businesses in the captive program than a large program the relationship, flexibility, and long term commitment ensures greater responsibility and less likelihood of unexpected cancellations of your bond program. Overall, surety programs are a great way to supply your firm with credit, although rates tend to fluctuate with the market. You can always be certain that Talisman will work to understand your unique business needs. In today’s uncertain economy? That’s the type of risk financing solution that will fill a valuable void.