Types of Bonds
There are literally hundreds of different types of surety bonds to choose from, and each has its own unique set of requirements. If you’re unsure as to which is best for your business, we have plenty of information available to assist you. More importantly, because we specialize in bond solutions for small emerging firms and specialty trades, we have the expertise to offer the best options to suit your needs.
In general, surety bonds are classified into three main categories:
Commercial Bonds
A commercial surety bond is sometimes referred to as a “non-contract bond” because it does not guarantee a specific contract like a construction bond would. However, commercial bonds are more commonly referred to as “license and permit bonds.” Specific business owners must obtain license and permit bonds to satisfy both local and state regulations in order to legally operate their businesses. There are hundreds of license and permit bonds to choose from.
Contract Bonds
Simply stated, contract bonds guarantee the performance of a written contract according to its terms and conditions. Some of the more common types of contract bonds include bid bonds, performance bonds, and payment bonds.
Example: An electrical contractor may need contract bonds to guarantee the performance and payment of labor and materials. Most public works projects required Bid, Performance, and Payment bonds from the contractor. These bonds will guarantee the contractor’s performance according to the terms of the contract and payment of labor and material bills.
Court Bonds
A Probate bond guarantees an honest accounting and faithful performance of duties by fiduciaries/trustees. These bonds are required by courts or statutes to protect the estates of deceased persons, incompetent persons, minors. etc.
A Bankruptcy bond or Equity bond might be required of an appointed fiduciary for the sale of real estate or for property in foreclosure, reorganization, or other litigation. This bond guarantees an honest accounting and performance of duties while managing and distributing the assets as directed by the court.
Judicial bonds may be required by a court in cases where someone is seeking legal benefit or relief. Examples would include Injunction bonds, Attachment bonds, or Release of Lien bonds.
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