What is an International Surety Bond?
An international surety bond ensures that the carrier works with the US Government to ensure that all cargo enters and leaves the country. The US government places restrictions on what merchandise can be brought into or taken out of the country. If the carrier does not check carefully for prohibited material, they can be fined by customs. This could potentially cause a lot of trouble if their cargo has an illegal substance in it.
An international surety bond is similar to other types of bonds, but also provides protection against damage to goods while under transportation through customs.
An international surety bond will be required when you are moving your home internationally instead of domestically moving them across states or countries away from where they are currently. You need this bond because while your belongings are in transit they are at risk of being damaged.
How does the International Surety Bond work?
The way it works contracts serves two purposes. To protect the owner in the event of a breach on the part of the contractor’s performance and/or payment. To protect workers, subcontractors, and suppliers in the event of a work accident.
Thus, if there is a construction accident on your property for which you are not liable, both these parties can file claims against your bond and be reimbursed for their damages. Your contractor will also purchase insurance: Workers Compensation Insurance: This pays medical bills and wages if an employee gets injured at work. If the workers get hurt while they’re working for you, this insurance can pay up to $15,000 per week while they recover.
Who is eligible to get an International Surety Bond?
When a foreign contractor gets a contract in the US, they need to make sure that they have an international surety bond. This will help them get paid for their work. Listed below are some of the details about who is eligible for this bond.
This surety bond is specifically designed to offer protection only to clients who had hired contractors from other countries on projects within the United States. The person or U.S business can file a claim against the project if they are dissatisfied with the performance results of the company’s services and prior experience has shown that it is not possible to recover losses without these bonds hence its mandatory for all companies looking forward to performing work on US Government projects.
But the fact is no one can file a claim against this bond except the person or business that had contracted them if they fail to perform according to the terms of their contract. So it offers protection solely to US businesses and individuals contracting with international companies.
How can you get an International Surety Bond?
An international surety bond is a form of insurance. It ensures the party that contracts with your business will be paid for any damages caused by your company’s actions. An international surety bond must be purchased from a US-based insurer and should only be purchased if it meets the requirements outlined in your contract. What does an International Surety Bond do? This type of bond covers claims made against your company, also referred to as the Principal, by clients or customers in many different ways:
- Commercial General Liability
- Contractor’s All Risk
- Boiler and Machinery
- Nuclear Energy Liability Insurance
- Pollution Legal Liability InsuranceIf
How much does it cost?
International Surety Bond cost is determined by the amount of coverage you are requiring. Basically all commercial insurance policies are written in whole dollar amounts. The International bond covers the financial obligation of an insured, meaning it will pay for the total obligations that you have with your customers.
Let’s say that your customer orders $5,000 worth of product and then cancels their order before they accept the shipment. This leaves you with $5,000 worth of merchandise that cannot be resold and must be disposed of or destroyed per their request. Your International Surety bond would provide coverage for this loss up to the limit underwritten on your bond form usually listed as per policy or per shipment.
Let’s say that on top of this example you are also selling your products to customers outside of the US. The International Surety bond covers any potential losses that occur when shipping your product to other countries even if the customer ends up not paying for their order or you have to resend additional shipments due to damaged merchandise.
Your International Surety bond ensures that you are fully protected against loss through claims made by your customers. The premium cost is usually dependent on two factors, the total amount of coverage required and the type of industry you are operating in.
This is why it is always recommended that whenever possible you purchase enough coverage so that there isn’t a situation where there could be any question as to whether or not your business would be able to remain solvent should an incident arise. Also, keep in mind that the best way to determine your International Surety bond cost is by getting a free quote.