Frequently Asked Questions About Bonds

What is a Surety Bond? A surety bond is a written agreement whereby one party called the surety (insurance company), obligates itself to a second party, called the Obligee (owner ) to answer for the default of a third party called the  Principal (contractor).  What is a Surety Company? A Surety Company is a corporation licensed under various insurance laws, which under its charter has legal power to act as Surety for others.  What is a License and/or Permit Bond? Bonds that are required by State law, municipal ordinance or regulation, to be filed prior to granting of a license to engage in a particular business or a permit to exercise a particular privilege.  Is it difficult for a Contractor to get Bonded? The review process for Contractors involves a thorough review of the contractors financial strength and capabilities. Analysis would include references checks on previous projects, credit history and experience, etc. Most contractors will qualify for the bonding on work that they typically perform.  What is a Bid Bond and when is it required? A bid bond is issued by the Surety Company to the owner of a project. The bid bond is subject to full or partial forfeiture if the low bidder fails to enter into the contract and provide the required Performance and Payment bonds. All Public and some private jobs require a bid bond or cashiers check to be submitted with a bid at the time the bid is submitted.  More...