What is a Commercial Surety Bond?
Commercial surety bonds cover a broad range of obligations that secure performance and/or compliance of the undertaking described in the bond. Commercial bonds may be required to comply with local, state, and federal regulations. We offer a variety of Commercial Surety bonds typically used by mid to large-size corporations and entities; from single domestic bond needs to global programs in excess of $500 million.
Types of Commercial Bonds
Bonds can be required by government entities, corporations, or individuals to guarantee individual or business performance or payment in a variety of different situations. Commercial surety bonds are also required by state or federal law for construction contractors working on federal projects; medical practices that accept Medicare; brewery, distillery and winery operations; freight brokers; car dealers; mortgage brokers; and medical marijuana dispensary operations. Commercial bonds can be divided into four different types, each providing protection against loss for a third party.
License and Permit Bonds
Auto dealers, mortgage lenders, and others operating in regulated industries are required by federal, state, and local ordinances to carry license and permit bonds. These bonds guarantee the principal’s ability to perform the task or complete the project for which they are bonded. Some license and permit bonds also include liability for injuries or damages to a third party.
Court Bonds
Bonds are used for various types of guarantees in court actions. A bail bond, for example, guarantees the defendant will appear for trial or forfeit the amount of the bond to the court. An appeal bond guarantees the original judgment will be paid if the appeal is denied. A plaintiff or a defendant may be required by the court to obtain a certain type of judicial bond depending on the circumstances.
Public Official Bonds
Those who hold public office, like notary publics, tax collectors, and town supervisors, are often required to obtain bonds. Public official bonds mitigate risks to the public for officials who fail to perform their duties. If the official commits fraud or does not comply with rules and regulations for their office resulting in financial loss to the government, the bond issuer pays a claim to reimburse the public.
Fiduciary Bonds
A fiduciary has a legal responsibility to act in the financial best interest of another. In turn, fiduciary bonds compensate for losses when the fiduciary doesn’t carry out their responsibilities correctly. Fiduciary bonds like guardianship, administrator, executor, and trustee bonds may be required by the court and would pay out to limit damages caused by a breach of duties.
Miscellaneous Bonds
The needs of private or unique business relationships may require bonds that do not fit into any of the categories listed above. Examples would include lost securities, hazardous waste removal, as well as wage and welfare bonds. Miscellaneous bonds can cover a broad scope of unique risk factors that are specific to the obligation agreement and offer a set payout as compensation for losses.