What Are Surety Bonds?
A surety bond provides a financial guarantee that your business's contractual agreements will be honored by both parties. Government agencies, banks, or investors often require that companies have a surety bond to verify that a contractor will carry out the terms of an agreement.
They also protect consumers and government entities, as they'll be able to make a claim if anything were to go wrong or if the business fails to fulfill its obligations.
Surety bonds work as an agreement between three parties:
The Principal
This is the person or company that will be purchasing or guaranteeing their surety bond.
Surety Company
this is World Insurance or the other financial entity that insures the bond.
The Obligee
An obligee is typically the entity that requires surety bonds to be posted for your company or organization to do business.
Unlike other types of insuarnce, surety bonds protect the third-party client from loss and not the policyholder. State and federal governments often require contractors to buy surety bonds; they help cover losses when contractors are financially liable for faulty work. The third-party customer or obligee can then file a claim against the bond if the principal company violates any terms and conditions of the contract.
Learn About Our Bonding Process
The process for getting surety bonds at World Insurance is short and straightforward. We understand surety bonding can be confusing, so we've made sure to simplify the process as much as possible.
Our surety bond agents are ready to help you determine the details of the bond you need and will offer you a series of options that best fit your business.
Types of Construction Security Bonds
Bid Bond
Contractors are required to submit a bid bond to be chosen for a contract. The bond promises the project owner that they will start and finish their obligations at that particular cost.
Performance Bond
The bid bond eventually turns into a performance bond, which means the bidder agrees to perform the work as promised and comply with all regulations.
Paymeny Bond
Payment bonds ensure that the contractor can pay its workers, contractors, and suppliers on time.
Maintenance Bond
Our maintenance bond ensures production materials and quality craftsmanship for up to two years after completion!
Completion Bond
Completion bonds assure that a project will be delivered on time, within budget, and free of liens. It can also cover any specific performance obligations.
License and Permit Bond
License and permit bonds guarantee that businesses comply with federal, state, provincial, and municipal laws. They also offer protection against fraudulent activities to both the government agencies issuing these bonds and consumers. Many industries in New York require a license and permit surety bond before starting any official business.
Liquor Bond
Liquor bonds are contracts that guarantee liquor license holders will comply with all applicable statutes, laws, and regulations- as well as paying sales tax on any alcohol sold.
Financial Guarantee Bond
Financial guarantee bonds can be included in a more significant surety bond and provide a guaranteed security measure for investors. If the issuer of a bond cannot repay its previous obligation to its bondholders, then the investor can make a claim on their financial guarantee bond to get compensated.
Motor Vehicle Dealer Bond
Motor vehicle dealers are also required to get a bond for their business. They protect the dealership and its customers by ensuring they will operate legally and ethically under local law. No matter what you are looking to get surety bonds for, World Insurance is here to help!
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