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Surety bonds are often required by government licensing authorities or potential clients as a way to ensure that a business will fulfill its obligations according to a contract. If you find yourself in need of a surety bond, this article will guide you through the process in three simple steps. We will also explain what a surety bond is and why it is required.
Step 1: Know the Bond You Need
Surety bonds do not have specific names but are legally binding forms required by government entities or other organizations. To determine the type of surety bond you need, consider who is requiring you to purchase it. This will help you identify the specific bond you need, and a specialty surety agent can assist you in securing the correct form.
Here are some examples of entities that may require a surety bond:
Federal, State, County, and Municipal Government Required Bonds
Governments often require surety bonds for licensing purposes or performance contracts. If you are obtaining a license through a government agency, the bond you need will likely be named after the type of license you are applying for. For example, if you are applying for a contractor’s license, you may need a “Contractor License Bond.”
Performance Contracts
If you are bidding on a government construction project, you may need specific performance-based bonds, such as a bid bond, a performance bond, or a payment bond. These bonds guarantee the satisfactory completion of the project under the agreed-upon terms between the government and the contractor.
Court Required Bonds
Courts may require various bonds for different reasons. The type of bond you need will depend on the role you are performing. For example, executors of a will may require an Executor bond, while administrators of an estate with no will may require an Administrator bond. Guardians of minors or incompetents may also need specific bonds, such as Guardianship bonds or Veterans Affairs Fiduciary Bonds.
Business or Private Owner Required Bonds
Private businesses or owners may require your business to be bonded for certain purposes. These bonds, also known as fidelity bonds, focus on good faith while on a customer’s private property or the financial management of retirement funds. For example, a janitorial service may need a Janitorial Service Bond, while a business handling retirement funds may require a Retirement Fund Bond.
It is important to note that there are thousands of different types of surety bonds, and this article cannot cover all of them. Using an online bond search tool or consulting with a bond specialist can help you find the specific bond you need.
Step 2: Work with a Specialty Surety Agent
Surety bonds are written by surety insurance companies, but most of these companies do not work directly with consumers. Instead, specialty surety agents have close relationships with multiple surety insurance companies, allowing them to negotiate multiple quotes and secure the lowest price for your bonding needs.
Surety Bonds Co is a specialty surety bond service that has developed direct relationships with top surety companies. By accessing these relationships, you can request a free bond quote online or speak with a bond specialist to purchase the precise surety bond you need.
Step 3: Get Your Bond Quote and Purchase Your Bond
Each surety bond has a bond amount, also known as the bond penalty, which represents the maximum amount the surety insurance company will pay on legitimate claims against the bond. This bond amount is one factor that determines the price you pay for the bond.
Some surety bonds have fixed prices, which you can purchase directly from Surety Bonds Co’s website. These bonds include notary bonds, most municipal contractor license bonds, and select public adjuster bonds. You will receive a copy of the bond via email, and in some cases, you can even download it directly.
Other surety bonds require a customized quote based on factors such as personal credit, prior business experience, prior business financials, and the bond amount. Your personal credit will primarily determine the bond’s cost, and a soft credit pull may be required to determine the premium rate. Once you receive your quote, you can purchase the bond, and Surety Bonds Co will provide you with the completed bond form for signing and submission.
It is essential to submit the bond to the entity requiring it, known as the Obligee. This could involve submitting the bond with a license application, giving it to a judge, submitting it with a contract, or providing a copy to a business.
What Is the Purpose of a Surety Bond?
Surety bonds are typically required by government licensing agencies to protect consumers from businesses that may fail to fulfill their obligations or engage in fraudulent practices. They serve as proof of a business’s financial responsibility and its commitment to act in good faith towards consumers.
For example, a surety bond may protect consumers from incomplete jobs, poor workmanship, mishandling of funds, misrepresentation of information, or failure to pay taxes. Governments cannot purchase insurance to cover these issues, so they require businesses to purchase surety bonds as a form of financial protection for consumers.
Similarly, court bonds and business service bonds are required to protect the parties involved from negligence, fraud, or acts of bad faith committed by a business or its employees. These bonds ensure that businesses fulfill their obligations in a trustworthy and responsible manner.
By purchasing a surety bond, you are demonstrating your commitment to ethical business practices and providing assurance to your clients and customers.
Choose the Right Surety Agent to Help You Get Bonded
Purchasing a surety bond involves more than just getting a quote and paying the price. Surety bond requirements can change over time, and it can be challenging to stay up to date with the latest regulations, bond amounts, and renewal dates.
When you work with Surety Bonds Co,, you are choosing a partner who will help you navigate the complexities of surety bonds. Our team will keep you informed about any changes to bond requirements and ensure that your bond remains valid and up to date.
Conclusion
Getting a surety bond involves three simple steps: knowing the type of bond you need, working with a specialty surety agent to secure the best price, and purchasing the bond based on a customized quote or fixed price. Surety bonds are required by government licensing agencies, courts, and private businesses to protect consumers and ensure that businesses fulfill their obligations in good faith.
When you’re ready to purchase your surety bond, contact Surety Bonds Co. for a free quote or use our online bond search tool to find the specific bond you need. Our team of bond specialists is ready to assist you and provide the support you need throughout the bonding process. Call us at 1-833-7-SURETY to get started.
