Various subcategories of bonding are available in 2021 although two umbrella types of surety bonds are most commonly known among consumers. Although the sub-category descriptions are ultimately more detailed, these two umbrella categories effectively differentiate between surety bonds written for construction projects and those written for miscellaneous companies, projects and purposes.
A contract surety bond is written for construction projects. A principal contractor and obligee are both involved in the process along with one of many available surety bond providers. Contract surety bonds are sub-categorized as bid, performance, payment or warranty bonds. Warranty bonds are also referred to as maintenance bonds.
Contract surety bonds are required for federal construction project contracts with a minimum value of $150,000 under specific conditions. States, municipalities and even private organizations are also required to purchase contract surety bonds for various purposes.
Commercial surety bonds, sometimes also referred to as miscellaneous surety bonds, include those for auto self-insurance plans written in lieu of liability auto coverage minimums. People, small businesses, corporations, statues, regulatory commissions, ordinances and all levels of government are sometimes required to purchase commercial surety bonds.
These bonds are promises to pay when someone else does not, for debts, accident-based expenses and other financial/obligatory defaults.
Commercial surety bonds are written for a significantly wide array of purposes and in a large variety of amounts.
Five sub-categories of commercial surety bonds are available from surety bond companies in 2021. Miscellaneous Bonds, public official bonds, fiduciary bonds and court bonds make up the first four sub-categories. Court bonds are also referred to as judicial bonds. Fiduciary bonds are also referred to as probate bonds.
The fifth and final type of commercial surety bond is referred to as a license-and-permit bond. Which of the many types of surety bonds do you need? Contact a surety insurance company in your state for more information today.