Are you required to get a surety bond but do not know which one to get? Would you like an example of a surety bond to understand the subject better? If so, you may want to keep reading. We have put together some information that may illuminate things for you. If you want to learn more about surety bonds in general, check out our Surety Bonds article.
What Are Some Examples of Surety Bonds?
Since there are thousands of different kinds of surety bonds, it means we have thousands of examples to choose from.
Some of them are:
Court Bonds
The purpose of court bonds is to reduce the financial loss of parties going through litigation. These include but are not limited to:
- Defendant Bonds
- Plaintiff Attachment Bonds
- Executor Bonds
- Guardianship Bonds
- Probate Bonds.
Commercial Bonds
Commercial bonds aim to protect consumers from unfair practices by businesses and professionals. In addition, government and regulatory agencies use commercial bonds to ensure that licensed professionals and businesses adhere to ethical and legal standards.
Some examples of commercial bonds are:
- Auto Dealer Bonds
- Contractor Bonds
- Freight Broker Bonds
- Notary Bonds
Contract Bonds
Contract bonds are said to be the most commonly used surety bond. The purpose of a contract surety bond is to guarantee that the Principal will follow and adhere to contract obligations.
A contract bond is widely used in the construction business. This is why it is also known as a construction bond. Depending on the state, most construction projects require a surety bond for projects amounting to more than $100,000.
Some examples of Contract Surety Bonds are:
- Performance Bonds
- Bid Bonds
- Payment Bonds
Now that we have given you examples of the most common types of surety bonds, let us get you ready for how to get one.
How Can I Get A Surety Bond?
To get a surety bond, you will have to look for a licensed surety company or insurance agency in your state.
During your consultation, they will conduct an evaluation and assess the risk associated with your bond. Then, an underwriter will calculate the risk and present the cost or premium of the bond.
Typically, the Obligee will give the surety bond amount required for the contract. The Principal can then find a surety company to provide the bond. The Principal, the Obligee, and the Surety company eventually have to sign an agreement for the surety bond.
The surety bond amount will be the maximum amount of money the Obligee can claim if the Principal (the contractor) is unable to fulfill the contract.
How Much Does a Surety Bond Cost?
The cost of the bond depends on many different factors. An underwriter will be the one to determine the premium amount. The premium cost may go as high as 15%, depending on the Principal’s credit score, type of surety, and risks associated with the bond.
If you need more information or would like to get a surety bond now, call us at (702) 850-7711.