![]() If an obligee feels the principal hasn't met the terms of the agreement, the obligee may file a claim against the surety bond seeking financial compensation for damages. This party could also be an entity like a government agency that has hired the principal to complete a specific task or project. This party could be the general public who benefits from the principal conducting business per applicable laws and regulations. Obligee – This is the party owed the obligation from the principal.The principal contacts a bonding company like Viking Bond Service to obtain a bond. ![]() Principal – This is the party responsible for fulfilling an obligation to complete a specified task or simply to conduct business according to laws and regulations.Unlike a traditional loan or insurance agreement, which typically involves two distinct parties, a surety bond means an agreement between three parties: All surety bonds have the same basic structure. Included are a wide variety of bonds, such as warehouse bonds, title bonds, utility bonds, and fuel tax bonds.A surety bond is a type of a risk management tool it's an agreement where the surety (often a large insurance company) provides their financial backing of the principal (the party responsible for fulfilling an obligation) for the benefit of the obligee (the party to whom the principal owes the obligation). Miscellaneous Bonds: These are commercial surety bonds that do not fit into any of the types above.Public official bonds included county clerk bonds, tax collector bonds, notary bonds, and treasurer bonds. Public Official Bonds: Required by statute for certain holders of public office, to protect the public from malfeasance by an official or from an official’s failure to faithfully perform duties.Typical such bonds are executor and administrator bonds, trustee bonds, guardian bonds, and conservator bonds. Fiduciary Bond (also called probate bonds) : Required of those who administer a trust under court supervision.Court bonds include appeal bonds, supersedeas bonds, attachment bonds, and injunction bonds. Court Bonds (also called judicial bonds) : Required of a plaintiff or defendant in judicial proceedings to reserve the rights of the opposing litigant or other interested parties.License and permit bonds include auto dealer bonds, mortgage broker bonds, contractor license bonds, and surplus lines broker bonds. License and Permit Bonds: Required by federal, state, or local governments as a condition for obtaining a license or permit for various occupations and professions.They are required of individuals and businesses by the federal, state, and local governments various statutes, regulations, ordinances or by other entities.Ĭommercial surety bonds can generally be divided into five types of bonds: Many private owners also elect to require contract surety bonds.Ĭommercial surety bonds cover a very broad range of surety bonds that guarantee performance by the principal of the obligation or undertaking described in the bond. Most state and municipal governments have a similar requirement. When do I need a contract surety bond? Any federal construction contract valued at $150,000 or more requires surety bonds when a contractor bids or as a condition of contract award. Warranty Bond (also called a Maintenance Bond): Guarantees the owner that any workmanship and material defects found in the original construction will be repaired during the warranty period.Payment Bond: Ensures that certain subcontractors and suppliers will be paid for labor and materials incorporated into a construction contract. ![]()
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