What Is a Surety Bond?
Channel: Lance Surety Bond Associates, Inc.
Date: 02/01/2015

Source: https://bit.ly/36GF5hj

Description:
You know you need to post a surety bond but have no clue what a surety bond is, neither which one is right for you? Here’s how it goes.

Unlike insurance, surety bonds are NOT meant to protect your business. Instead, surety bonds serve to protect the public from dishonest business practices. Every surety bond agreement has three sides to it - the principal, the obligee (usually a governmental department), and the surety bond company. The surety bond company has the responsibility to ensure that the bonded principal will comply with all rules and regulations. 

Surety bonds are usually divided into four main types: 
- license and permit bonds, 
- contract bonds, 
- court bonds, and 
- fidelity bonds. 
These are different from one another and are relevant in different situations.

1. Contract bonds guarantee the performance of obligations under a contract. They are sometimes also referred to as construction bonds. Contract bonds protect the project owner (the obligee) by guaranteeing that a contractor will perform in accordance with the terms of the contract. Contract bonds are further divided into “Bid Bonds”, “Performance Bonds”, and among others “Subdivision Bonds”.

2. License and permit bonds, on the other hand, are a prerequisite to be able to engage in certain business activities. Such bonds can be required by the federal government, the state (such as a state’s Department of Motor Vehicles), or the municipality. Auto dealer bonds, contractor license bonds, freight broker bonds, mortgage broker bonds and many more are all examples of license and permit bonds. 

3. Court bonds are used to guarantee that a fiduciary will fulfill his or her responsibilities as ordered by the law or the court. In particular, appeal bonds, guardian bonds, and probate bonds are all different types of court bonds. 

4. Fidelity bonds are the type of bonds that can protect a business. These protect a business and its clients from any possible employee dishonesty. This includes theft, embezzlement or forgery. Among surety bonds, fidelity bonds are more like a traditional insurance policy, rather than a surety bond.

Additional resources:
1. Surety Bond Glossary: https://bit.ly/36k3WI0
2. If you want to learn more about how to get bonded, go to https://bit.ly/3NenU7N
3. If you want to know how much a surety bond costs, go to https://bit.ly/3wvLmHO
4. If you want to know if you can be bonded after a bankruptcy, visit https://bit.ly/3NigIr9
5. To learn what is a bond claim, go to https://bit.ly/3L9sen2
6. If you have more questions, check out these frequently asked questions: https://bit.ly/3wvWLaG
7. If you want to get a free surety bond quote, apply now at https://bit.ly/3JyNDWo