BONDSA surety bond is type of Commercial Lines coverage. The surety (insurance company) allows the principal (party who agrees to perform the specific obligation) to purchase the bond at the request of the obligee ( party for whose benefit the bond is written) to ensure that if the principal defaults on the obligation, the obligee’s damages are payable by the surety to the obligee. For example, you decide to have a contractor build your new home. You (the obligee) enter into an agreement that requires the contractor (the principal) to purchase a Contract Bond from a surety (insurance company), guaranteeing that the contractor won’t default during the contract period. If the contractor does default, the insurance company (the surety) will pay you damages. Types of Surety Bonds:
License & Permit Bonds- License bonds guarantee the principal will comply with codes and regulations established by the obligee. Permit bonds grant a Privilege. Types include:
(Top) Public Official- A public official bond guarantees that elected or appointed officials will faithfully perform their duties. The bond amount as well as duties is usually specified by statute or ordinance. Types include:
(Top) Probate & Other 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 as estates of deceased persons, incompetent persons, and minors are set up and administered. (For the estates) Types include:
(Top) A Bankruptcy 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 and accounting of duties while managing and distributing the assets as directed by the court. Common types include Receivers and Trustees. Other Judicial bonds may be required by a court in cases where someone is seeking legal benefit or relief. These court bonds can be extremely hazardous. Specific supplemental information may be required. Types include:
(Top) Miscellaneous surety bonds include those that do not fit into any of the other surety categories. These are usually more hazardous obligations. Types include:
Miscellaneous surety bonds require more extensive underwriting because the guarantee to the obligee is monetary. In addition to the application, supporting information such as signatures, financial statements, and other supplemental forms are required. (Top) Simply stated, contract bonds guarantee the performance of a written contract according to its terms and conditions. Due to the nature of contract surety bonding, contract bonds require extensive underwriting. We recommend contacting Executive Insurance group at least one month before bidding on a contract. Types of Contract Bonds:
A Bid bond guarantees that if a contractor is the low bidder on a project, he/she will enter into a contract and provide a Performance bond. A Performance bond guarantees the contract will be completed according to its terms and conditions. A Payment bond guarantees payment of laborers, subcontractors, and material suppliers. (Top) A Fidelity Bond will indemnify (restore the policy holder to the same financial condition before the loss) the insured for loss caused by a fraudulent or dishonest act of a person covered by the bond (generally an employee) with the intent to cause the insured a loss and benefit the employee or others the employee intended to benefit. Business owners don’t typically believe employee dishonesty will happen in their business. However, employee fraud is more common than you think. Executive Insurance Group encourages all business customers with employees to purchase employee dishonesty coverage. (Top) If you have any further questions, please call us at Executive Insurance Group. Our team of experts can be reached Mon-Fri 8 a.m.-5 p.m. at 330.966.0080 locally, 800.981.0080 toll free, or email: info@executiveinsurance.com |
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