Surety
What are the types of surety bonds?
There are several types of surety bonds, including contract bonds used in construction projects, commercial bonds for business transactions and regulatory compliance, and court bonds required in legal proceedings. Examples include bid bonds, performance bonds, license bonds, and appeal bonds.
Who needs a surety bond?
Individuals, businesses, contractors, and professionals may need surety bonds depending on the nature of their activities and contractual obligations. For example, contractors often need surety bonds to bid on and perform construction projects, while businesses may need license bonds to operate legally in certain industries.
Why are surety bonds required?
Surety bonds are required to provide assurance to the obligee (the party to whom the obligation is owed) that the principal will fulfill their obligations. They serve as a form of financial protection for the obligee in case the principal fails to perform or meet their obligations.
How much does a surety bond cost?
The cost of a surety bond, known as the premium, varies depending on factors such as the type of bond, the amount of coverage required, the financial strength of the principal, and the risk associated with the obligation. Premiums are typically a percentage of the bond amount.