Bonds

Surety Bonds

As the principal, obtaining a surety bond prior to working with a new project owner displays business integrity and financial stability. To get a surety bond, principals must apply and meet certain standards set by a surety company. Being rewarded with a surety bond from a top quality surety company is a testament to your business strength. Think of a surety bond as a line of credit. If you can’t complete a project, the project owner can then tap into that line of credit to finish the project as necessary. Surety business bonds are a three-party agreement.

The three parties involved include:

The principal, which is the contractor, organization or employer providing the work.

The surety company supplying the bond.

The obligee, who is the project owner.

For a project owner, surety bonds can be a lifesaver.

 

Even if a terrible tragedy prevents a principal from fulfilling a contract, the project must still be completed. Working with a principal that possesses a surety bond can provide peace of mind that, no matter what, your job will get done.

Although Surety Bonds are common in the construction/contracting field, there are many types of bonds that serve many different purposes.

License And Permit Bonds

The obligee, which is often a government agency, requires a bond from the principal. The bond states that all codes and regulations will be followed. For example, a plumber may be required to obtain a license before beginning work. To get a plumber license, you must first secure a license bond, agreeing to adhere to city plumbing code.

Public Official Bonds

This bond states that elected or appointed officials will perform the duties they are given. Typical bonded positions include notaries, judges, and treasurers.

Probate And Other Court Bonds

If you’re given a certain responsibility as a fiduciary or trustee, a probate bond guarantees you perform honestly and faithfully.

Other court bonds include:

Administrator

Executor

Conservator

Injunction

Release of lien

Miscellaneous Bonds

These are complicated bonds requiring an experienced underwriter, since most involve large risk obligations.

These include several types of bonds, including:

Utility Payment Guarantees

Union Wage And Welfare

Contract Performance Bonds

This bond guarantees that you will follow all terms and conditions set forth by the contract. Many require advance notice.

Types of contract performance bonds include:

Bid Bonds

Performance Bonds

Payment Bonds

These definitions provide a brief description of the terms and phrases used within the insurance industry. These definitions are not applicable in all states or for all insurance and financial products. This is not an insurance contract. Other terms, conditions and exclusions apply. Please read your official policy for full details about coverages. These definitions do not alter or modify the terms of any insurance contract. If there is any conflict between these definitions and the provisions of the applicable insurance policy, the terms of the policy control. Additionally, this informational resource is not intended to fully set out your rights and obligations or the rights and obligations of the insurance company, agent or agency. If you have questions about your insurance, you should contact your insurance agent, the insurance company, or the language of the insurance policy.