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 principal, which is the contractor, organization or employer providing the work.
The surety company supplying the bond.
The obligee, who is the project owner.
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.
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.
This bond states that elected or appointed officials will perform the duties they are given. Typical bonded positions include notaries, judges, and treasurers.
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:
Release of lien
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
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: