What are Different Types of Surety Bonds? |
Posted: May 12, 2016 |
Surety bonds play a crucial role in today’s unstable and unpredictable economy. These bonds are extremely important to those business owners who want to make sure that the legal terms of their closed contracts and agreements are followed by all parties in a proper manner. These bonds have been around for a thousand years in some form or the other. While some may consider bonds an unnecessary expense that significantly cuts into profits, some companies may view bonds as a way to bid on projects they can accomplish. What are surety bonds? A surety bond is a contract between three parties – the principal, the surety and the obligee. The surety monetarily guarantees to an obligee that the principal will act as per the terms established by the bond. This bond makes sure that the contract will be completed in case a contractor defaults. A project owner (obligee) seeks a contractor (principal) to accomplish a contract. Know that types of surety bonds will give a boost to your reputation and trust within the community. Consumers will notice that you’re fully bonded and insured which will make them rely on you for accomplishing the required work. Here are some different types of surety bonds: 1. License Surety Bonds – Commonly referred to as License and Permit Bonds, these bonds are normally named as they are when it comes to applying for a license or permit in a particular state. These bonds are required by states and municipalities so as to obtain a license in a given industry. They seek that a licensed business will perform its obligation according to a specific state law governing an industry. 2. Performance Surety Bonds – These bonds are required for large, public construction projects which are financed by the money of a taxpayer or large contracts which need financing from a banking institution. These bonds protect the public or lender from incurring a loss when a contractor isn’t able to finish the project as per the terms in the contract. 3. Court Surety Bonds – These bonds are often required by the local, state, and federal courts during legal proceedings. Such bonds are meant to protect a party to a legal proceeding and may be required for executors of an estate, guardians of minors and incompetents. Many surety companies in the US have evolved extensively, delivering reliable and quality services. And there are different types of surety bonds for businesses varying from state to state in terms of names, requirements and specifications. You may also wish to get detailed information at http://www.suretybondprofessionals.com/
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