Are Surety Bonds Really Necessary?
Surety Bonds are contracts between three parties. The Surety (who is the insurance company that guarantees the work of the principal and is liable for claims against the principal up to the bond amount), the Principal (who purchase the bond and agrees to perform the work in a compliant manner), and the Obligee (who requires that the principal purchase a bond to attain a license or perform a service). Usually the obligee is a government office.
There are four main types of surety bonds. The first type is the Contract Surety Bond. The purpose of this bond is to ensure the obligations of a construction contract will be met. General contractors and construction companies will use this bond. This bond is typically used for commercial and federal real estate projects. The second type is the Commercial Surety Bond. The purpose of this bond is to ensure that licensed companies will comply with all required codes. Companies required by law to operate with specific license will use this bond. This bond is typically used for licensed professional. The third type is the Fidelity Surety Bond. This purpose of this bond is to protect companies and their customers from employee theft. Companies with employees who handles large amount of cash will use this bond. This bond is typically not required. The fourth of the main surety bond is the Court Surety Bond. The purpose of this bond is to ensure protection from loss in a court proceedings. Companies in court proceedings will use this bond. This bond is typically required for plaintiffs but not for the defendants.
All surety bond types charge a bond premium. This is based on the business owner’s personal credit score and the performance of the business. The length of the surety bond is between one to four years, which the principal can be renew the bond. Some surety bonds have no expiration.
There are many surety bonds glendale az. There are many surety bond companies. They can provide same day approval. Before getting a surety bond you will need to ask yourself some questions. Who are the participants? Why is the surety bond needed? What type of surety bond will be needed? What is the amount needed?
You may or may not be able to get a refund on a surety bond once it has been issued. In short it all depends on the circumstance and the issue. You will need to contact the surety company that issued the bond, and keep in mind that they are not required to issue a refund. You don’t have to pay the full amount of the surety bond. Generally, you will pay a percentage of the bond amount, which is based largely on your financial strength. But, some contract bonds require you to pay a percentage of the full contract amount. There are many different types of bonds. Some are Bid bonds, performance bond, License and permit bond, Business service bond, employee dishonesty bond and Guardianship bond.