Texas Bond Insurance

Living in a state where everything is bigger and better has its perks but suffice it to say, the struggle was felt by 30 million Americans residing in Texas. The Lone Star State has the nation's second-largest GDP at $1.77 trillion.

According to the US Census Bureau, Texas has 3 million small businesses that employ 4.9 million people. If you're one of the three million small businesses needing to secure insurance coverage and get proper surety or bonds insurance, read on to grasp Texas Bond Insurance.

Requirements For Bonds Insurance Policy In Texas

Different types of surety bonds address various surety requirements. Good Texas bond insurance providers have decades of experience servicing contractors, large enterprises, and small businesses, gaining a thorough understanding of the contracts required to help your company grow. 

Here are a few steps to follow to ensure you have all the requirements for your bonds insurance application.

• Get in touch with the Texas Department of Licensing and Regulation to find out what types of business insurance and bonding are required to apply for a Texas business license.
• Contact the Texas Secretary of State's office to determine whether business insurance and bonding are required to form a legal business entity, such as a corporation, limited liability company, or partnership.
• To purchase an insurance policy, contact a licensed insurance provider. Provide information about your company, the types of services or goods you intend to offer, whether you intend to hire employees, and the location of your company.
• Purchase a surety bond from a reputable insurance company. When selling goods to customers, a surety bond helps keep business owners honest. The state of Texas may use the bond to pay legal expenses in the event of a lawsuit or settlement.

Who Needs Bond Surety Insurance?

Contractors, car dealers, notaries, accountants, store owners, court reporters, truck drivers, and others are frequently required to obtain surety bonds ranging from $10,000 to $50,000 or more to conduct business.

In many cases, you can get business insurance and bonds from the same insurer. A monthly premium is required to keep the bond active. By posting this bond, the principal agrees to abide by all provisions of the Texas Insurance Code. This code prohibits the following acts:

• Not renewing a license while continuing to operate
• Failure to notify the Department of any agent's termination and the reason for termination, change of mailing address, felony convictions, or any administrative action taken by another state or the federal government
• Acquiring and insuring any item in which they have a personal interest
• Failing to keep necessary records

What Does Bond Insurance Cover In Texas?

Surety bonds ensure that an insurance company will reimburse your client if your company fails to complete a project or meet a contract deadline. Bond insurance in Texas typically cover the following:

• Check mark in blue
• Failure to finish a project
• Check mark in blue
• Licensing and permitting requirements
• Check mark in blue
• Noncompliance with standards or regulations
• Check mark in blue
• Employee theft

Surety bonds provide coverage tailored to your industry. A credible and reliable Texas surety bond comes in various forms depending on the profession. Here are some examples:

• Bonds for contractor licenses
• Bonds for janitorial services
• Bonds for insurance brokers
• Notarial bonds

Other Insurance Types

Knowing the different types of auto insurance and their coverages is important in getting the right policy for you if you're shopping for auto coverage. Here are some of the most common types of car insurance, how they work, and what they cover:

• Liability Insurance
• Collision Insurance
• Comprehensive Insurance
• Uninsured Motorist Insurance
• Personal Injury Protection Insurance
• Towing And Labor Insurance

Quick Statistics On Texas Bonds Policy

• Bond insurance increased by 9% in 2021, alongside the market demand.
• The insurance industry saw a slight increase from 7.1% in 2020 to 7.8% in 2021, with issuance reaching $480.03 billion.
• Texas municipal bonds in is at approximately 2,100 issues amounted to over $62 billion.
• Texas issuers passed $23.8 billion of new debt sales on May 8, 2022. The market continues to push forward despite Wall Street banks being pushed out of the state’s municipal bond market.
• Municipal bonds present strong tax advantages and a solid yield of a $3.8 trillion market.
• There is a projected rise in bond insurance costs due to climate threats with more than 60% of Americans facing insufficient readiness when it comes to long-term planning for climate-related disasters.

Quick guide on Texas Worker's Compensation

Frequently Asked Questions 

The following are some frequently asked questions about bonds insurance in Texas:

1. Can insurance cover my bond?

Yes. Bond insurance safeguards bondholders through principal and, in some cases, interest repayment. Those who purchase this type of insurance may earn a higher credit rating, making their bonds more appealing to investors.

2. What is the difference between bonds and insurance?

Insurance protects the business owner or any other policyholder from financial damages when they make a claim. Meanwhile, bonds provide reimbursements for claims made by those in a contract with the principal for a specific type of work or project.

A bond generally acts as an additional level of insurance if your contact meets – or doesn’t meet – specific conditions.

3. In Texas, how much does it cost to get bonded and insured?

The cost of getting bonded and insured in Texas depends on the coverage and deductibles you plan on having. Surety bonds typically cost a percentage of your preferred coverage amount, with an annual premium of up to 15%.

Meanwhile, contract and fidelity bonds generally cost 1% to 3% of the total coverage. It’s best to discuss your options with a trusted insurance agent.

What is the process for getting bonded and insured in Texas?

Bond coverage is a common requirement for small businesses, alongside general liability and workers’ compensation. So first, apply for a business license through the Texas Department of Licensing and Regulation and determine whether a specific type of business insurance and bonding is needed to operate your business.

Although business insurance and bonding are not required for your line of business, you can still make a sound judgment and gain peace of mind by contacting a licensed insurance provider to help you find a suitable policy to protect your business.

Reliable Texas bond insurance and workers' compensation are competitive in small businesses and large enterprises. However, finding the right BOP with business property insurance, business income insurance, bodily injury coverage, and even professional liability insurance can make a big difference in your business's future.

Review all your options before purchasing your business insurance and surety bond from a trusted insurance provider. Note that monthly premiums may vary depending on the surety company or insurance company you choose to plan with.

Also, Learn about Ohio Bonds Insurance

To learn more about bond insurance policies, license and permit bonds, and surety bonds for your business in Texas, read through our blogs at Assured Standard and grasp what smart long-term business solutions could look like.