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Bond Insurance

Bond Insurance Explained

Bond insurance refers to a type of insurance policy purchased by a bond issuer to guarantee the repayment of the principal and interest payment to bondholders in the case of default. Once the bond issuer buys the insurance, their bond rating ceases to apply, and instead, the insurer’s credit rating applies.

 

How Does It Work?

Once the insurance is in place, the insurer automatically takes up the liability. Therefore, the insurer will make any principal and interest payments owed by the bond issuer. Consequently, even in the bond issuer defaulting event, bondholders shouldn’t experience much trouble.

It is a form of credit enhancement. The premium paid by the bond issuer to the insurer serves as a measure of the perceived risk of failure of the issuer.

Different Types of Coverage

Bond insurance has two main types: surety and fidelity, each offering a unique form of protection.

Surety bonds guarantee a business’s integrity towards completing a said job. It also ensures that the company will adhere to all laws and promises outlined on the contract. The widely-known types of surety bonds are contract bonds, and license and permit bonds. As the name suggests, contract bonds guarantee the contractor’s price, completion period, and the work to be done. On the other hand, license and permit bonds ensure that the business adheres to relevant license and permit regulations.

The other type of coverage is a fidelity bond, which offers protection against loss due to employee misconduct.

Major Benefits

This type of insurance gives a business the ability to leverage its business growth. With the insurer’s credit rating in play, the company is better positioned to take bigger risks to grow it. While other businesses can purchase bond insurance, it is especially essential in the construction and financial sectors. Besides, the insurance allows a credit professional to offer unbiased criticism to the business in question.

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The staff is very knowledgeable and helpful and always takes the time to help me with my problem. I highly recommend them.I had occasion to change over my home insurance to A.Young Agency, and once again I was met with exceptional service by Joe LeDuc and Christine the office manager. They make one feel like they are family and go above and beyond to make one’s experience easy and stress-free. I highly recommend them.
Anne Lee
Anne Lee
All staff are very responsive and helpful great agency
Eric Doty
Eric Doty
Shannon is fantastic. She always takes time to acknowledge me when I stop in. The team there is friendly and I feel like they, although very professional, have a very personal investment in their business. 🥰
Mark Rouleau
Mark Rouleau
I've know John for many years and he's a Great Guy who knows his stuff.
M.C. Cawley
M.C. Cawley
I absolutely love this insurance company! They always call when there's a better deal available to save me money! This company keeps in touch and cares about their customers and even remembers my birthday and sends a birthday card! If there's a problem with the account they're quick to investigate. They always have a solution! Thank you A Young I love all of you! Even though the pandemic has been hard on my family you always know how to make me smile! GOD BLESS YOU ALL!
Lillie Collins
Lillie Collins
Working with Young Insurance is a pleasure.staff is friendly,knowledgeable,and will work with you to get the insurance you need at the best rates.
Kevin Cavanaugh
Kevin Cavanaugh
I just love Shannon, she's the best!! She works so hard to get the best rate for me.I would highly recommend this company.
Barb Genta
Barb Genta
Got me what I needed, when I needed it and at the price I needed.
Dale Hartzfeld
Dale Hartzfeld
Nice friendly local place for insurance
Kathleen Hoadley
Kathleen Hoadley
Joe is the best! Friendly staff that cares about you. I felt like family. Really appreciate the guidance and ease of switching insurance companies. Thank you - Nikki
Nikki Quintanilla
Nikki Quintanilla
Everything we buy in life has three parts to it.Service, price and quality. Normally, one can only expect two out of three. Very rarely do you ever get the total package. A Young Insurance is an insurance company~ that has excellent service , excellent quality and excellent prices! 10 🌠
Tracy Richardson
Tracy Richardson
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martin mccloud
martin mccloud
They are the best Agency ever
Etoy Nichols
Etoy Nichols

1400 Scott Lake Road, Suite AA
Waterford, MI 48328