Bond Rights and Wrongs

Feb. 6, 2013

Business cards used by my father's old locksmith business stated, "qualified bonded locksmiths."   The statement looked good on his business cards and nobody ever questioned the nature of his bond.   By only using the word 'bond' and not attaching a beginning explanatory word, the value of the wording on his business cards was open to wide interpretation.   
One type of bond is a fidelity bond which is a form of insurance covering policy holders from fraudulent acts by specified individuals.   Fidelity bonds and crime insurance are almost synonymous terms. A fidelity bond or crime insurance is usually designed to protect a business owner against dishonest acts by employees such as employee embezzlement or theft.  
Another type of bond is a surety bond. This bond is a promise assuring payment to the customer if you do not fulfill the obligations of a contract.  A third party, such as an insurance company, agrees to guarantee payment. This demonstrates the credibility of you, the principal.
A performance bond is a type of surety bond.  Performance bonds are often required by the customer who can then receive compensation in case the job is not satisfactorily completed for any reason in the time period agreed upon.  As example, the government may require you to obtain a performance bond while you work on the doors of a post office.  They want to make certain that they will be compensated if the work is not completed as expected.   
 A payment bond is often issued as part of a performance and payment bond. A payment bond gurantees payment by you, the contractor, to pay sub-contractors and suppliers all labor and material costs which you initially agreed to pay.
Bonds and insurance come in many forms.  "One size fits all" does not apply.  If you unintentionally ruin a door while mortising a lock or drop an electric drill on a customer's grand piano, the bond you should have is a surety bond and can only be obtained through your insurance company. There is no valid surety bond available directly to you through the Locksmith industry. Buyer be ware.
In the final analysis the best advice is to consult your local insurance agent and apply for the coverage best suited to your individual expectations and needs.