Surety Bonds

Types of Surety Bonds--Contract Bonds

-guarantee the performance of the terms and provisions of written contract -a number of contract bonds (completion bonds and performance bonds) may be required to guarantee diff aspects of a single construction project -bid bonds: type of contract bond typically used in construction business, guarantees that the contractor will enter a contract, if awarded lowest bid, and then provide other bonds as required by contract. promises that if contractor is awarded the contract, it will be accepted -performance bonds: type of contract bond. guarantee that the principal will complete the contract as agreed upon. guarantee contractor will perform the work

General

-surety bond serves as guarantee of performance. -guarantees that the principal (known as obligor) is honest and has both financial and work expertise to carry out obligation -commonly, a Surety is a Casualty Insurance Company -once a surety bond is issued, it cannot be canceled and does not expire until contract has been completed**

Types of Surety Bonds--Judicial Bonds

-used in court. guaranteed ind involved will fulfill obligations in court proceedings. -falls into two broad categories-1) court or litigation bonds or 2) fiduciary bonds 1)litigation bonds: include bail bonds, cost bonds, appeal bonds, attachment bonds, injuction bonds 2) fiduciary bonds: available for admins and executors of estates, guardians, receivers in bankruptcy cases and to various trustees

Principal or Obligor

in surety, the ind who purchases the bond, person whose obligation is being guaranteed, ex: contractor who is contracted to construct a building or a person charged with a crime when they must appear in court. so criminal purchases the bond to guarantee performance

Types of Surety Bonds--Misc Bonds

include license or permit bonds, public official bonds (other types of judicial bonds) 3) public official bonds: bonds reqd by law and guarantees honesty and faithful performance of duties by elected officials 4) license and permit bonds: guarantee from a surety(ins comp) to an oblige(ind who would be injured if obligations not performed) that a company (the obligor) will comply with laws, ordinances, regulations loss instrument bonds (security bonds), motor vehicle bonds and workers compensation self-insurer bonds

Obligee or Insured or Beneficiary

individual in whose favor obligation is being made. in surety, this is the person who would be injurerd if obligation is not performed such as the owner of the property for whom the contractor is building or the State if an accused does not appear in court -person whom contracts for work or to whom the courts seek to provide financial protection

Surety or Guarantor

the insurance company who promises to pay if principal does not perform in the proper manner -surety is resp to the oblige or beneficiary for compensation