If you are running an auto insurance company, you may attract more clients by offering mechanical breakdown insurance. Many car insurance policies do not cover major systems such as the transmission and engine, so you can get an upper hand in the market.
However, it is important to understand that your company will likely cover some pricy repairs. In case of a default, it helps to have another party available to assume responsibility. For this reason, if you want to offer mechanical breakdown insurance in Louisiana, you will need to deposit a surety bond.
A surety’s purpose
Mechanical malfunctions are stressful enough to think about. Your clients should have confidence that you will fulfill your duties as an insurer, and a surety bond can give them that confidence. A client will be able to get compensation in the event that you cannot follow through with the contract’s terms.
A surety’s requirements
The surety bond must reach the Louisiana Department of Insurance’s standards. For one, your third-party insurer must have admittance in issuing surety bonds within the state. The LDI will give you a form through which you should file each bond. In the event of a cancellation, you should give at least 30 days’ notice. Any extension will need a continuation certificate at least 10 days before the bond expires.
A surety is not a bank guarantee or an insurance policy, but a promise that you will do your part when there are staggering car repair costs. Not only can a surety bond help your clients, but it can help you retain your clients’ trust.