WHO IS INVOLVED?
Obligee- Who requires the bond
Principal- Who purchases the bond to ensure the fulfillment of the obligation
Surety company-The company supplying the bond
Unlike insurance, where the insurance company is responsible for claims, the principal is responsible with bonds. Bonds offer coverage for the obligee or project owner, whom the principal is providing a service to or doing business with. Rates vary based on factors such as type of bond needed, type of project, and cost of project. There is a huge array of bonds you can acquire. Here are some common bonds:
License and permit- Before being licensed, government organizations require business owners to obtain a license or permit bond. This bond ensures businesses comply with laws and regulations and protects consumers.
Bid Bond- Project developers require these bonds to ensure the principal has the financial means required to accept a job.
Contract-A bond that ensures the fulfillment of a contract. If the contracted entity does not execute its obligation as outlined in the bond, the project developer can put in a claim with the bonding company.
Payment Bond- In the event a contractor defaults on payment, this bond ensures workers, subcontractors, and suppliers will be compensated.
Performance-Ensures the project is completed in accordance with the contractual terms. The project developer can submit a claim if the contractor does not do so.
Maintenance Bond- For a specified period of time following the completion of a project, a maintenance bond will ensure repayment if workmanship or materials used for the project are found to be defective.
Public Notary-As a notary you are appointed to certify the legality of signatures on documents. Bonds are required in order to ensure notaries adhere to notary laws.
Motor Vehicle Dealer Bond-In order to become a motor vehicle dealer, you must submit proof of a motor vehicle dealer bond. This bond ensures the motor vehicle dealer complies with all laws pertaining to motor vehicles.
Public Adjuster-Obtaining a public adjuster bond is a prerequisite to becoming a licensed public adjuster by the state.
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