A surety bond is a promise to pay one party (the obligee) a certain amount if a second party (the principal) fails to meet some obligation, such as fulfilling the terms of a contract. The surety bond protects the obligee against losses resulting from the principal’s failure to meet the obligation.
A surety bond is a contract among at least three parties:
- The obligee – the party who is the recipient of an obligation,
- The principal – the primary party who will be performing the contractual obligation,
- The surety – who assures the obligee that the principal can perform the task
License and Permit Bonds
License and permit bonds are required by certain federal, state, or municipal governments as prerequisites to receiving a license or permit to engage in certain business activities. These bonds function as a guarantee from a Surety to a government and its constituents (Obligee) that a company (Principal) will comply with an
underlying statute, state law, municipal ordinance, or regulation.
- Contractor’s license bonds, which assure that a contractor (such as a plumber, electrician, or general contractor) complies with local laws relating to his field.
- Customs bonds, including importer entry bonds, which assure compliance with all relevant laws, as well as payment of import duties and taxes.
- Tax bonds, which assure that a business owner will comply with laws relating to the remittance of sales or other taxes.
- Reclamation and environmental protection bonds
- Broker’s bonds, including Insurance, Mortgage, and Title Agency bonds
- ERISA (Employee Retirement Income Security Act) bonds
- Motor vehicle dealer bonds
Fidelity bonds,also known as employee dishonesty coverage, cover theft of an
employer’s property by its own employees. Though referred to as bonds,
fidelity coverage functions as a traditional insurance policy rather than a surety bond.
If you require a bond for your type of business please contact our office and we can send you the appropriate applications. Generally obtaining a bond is easy and the underwriting process simple. Contact us today!