Surety and Contractor Bonds
We offer Contractor’s Surety Bonds for Self Employed & Small Businesses
A surety bond is a promise or a contract, to pay one party, (the insured) a certain pre-determined amount if a second party (the principal) fails to meet some obligation, such as fulfilling the terms of a contract. The bond protects against losses resulting from the principal’s failure to meet the obligation. A contractor’s bond is a financial assurance that a contractor will complete a job to satisfaction. If a contractor fails to complete a job as expected, the agency which issued the bond will provide a pay out to compensate. In many regions of the world, contractors must be bonded in order to obtain a contractor’s license.
Bonds provide financial protection in the event that a particular job is not performed as desired. If a contractor walks off a job or fails to complete it, the bond would cover this. A contractor’s bond also covers things like unpaid suppliers or subcontractors, damage to the property caused by the construction, and lost or stolen materials from the site.
Contractors can purchase a bond from a surety company. The contractor will be required to pay premiums to keep the bond current, with the amount of the premiums varying, depending on the contractor’s history and the amount of the bond. If someone wants to make a claim on a bond, he or she would contact the surety company and provide evidence to back up the claim, such as proof that a contractor had walked off a job, or ordered and used materials without paying for them.
The term “surety bond” is a generic term covering a broad range of specific bonds and contracts. Included in this category are: bid bonds (guarantee that a contractor will enter into a contract if awarded the bid), performance bonds (guarantee that a contractor will perform the work as specified by the contract), payment bonds (guarantee that a contractor will pay for services and materials), and maintenance bonds (guarantee that a contractor will provide facility repair and upkeep for a specified period of time).
Are Surety Bonds Required?
Most surety bonds fall under required license and permit bonds for specific industries. These bonds are generally required in order for businesses to obtain a license or permit to operate in any city, county, or state. State insurance commissioners are responsible for regulating corporate surety activities within their jurisdictions. These state insurance commissioners also license and regulate brokers or agents who sell the bonds; helping to ensure the protection of assets of all parties involved. Bonds are different than insurance policies, as the bonding company will pay the bond and look for restitution from the client. Bonding requirements are fairly stringent. Examples of bonds are:
- Contractor’s license bonds. These bonds assure that a contractor (such as a plumber, electrician, or general contractor) complies with local laws relating to his field.
- Customs bonds, including importer entry bonds: Custom and importer entry bonds assure compliance with all relevant laws, as well as payment of import duties and taxes.
- Tax bonds: Tax bonds assure that a business owner will comply with laws relating to the remittance of sales or other taxes.
- Broker’s bonds: Brokers bonds include: Insurance, Mortgage, and Title Agency bonds
- Receiver’s Bonds: Receiver’s Bonds are required when a “receiver” is appointed by a court to take control and manage the financial affairs of a building or property.
- Notary Bonds: Notary Bonds are required to ensure that if a notary official should violate public trust (through the negligence of their duties) funds are available to reimburse the State for its loss.
- Utility Bonds: Utility Bonds are issued to guarantee the payment of a utility bond. These bonds are usually posted as a way to waive a security deposit.
- ERISA (Employee Retirement Income Security Act) bonds
- Motor vehicle dealer bonds: These bonds ensure that motor vehicle dealers comply with all relevant laws and ensure a measure of transparency in the operation of business and sales.
- Money transmitter bonds.
- Health spa bonds: Health spa bonds ensure that a health spa will comply with local laws relating to their field, as well as refund dues for any prepaid services in the event the spa closes.
Surety bonds in their various forms are essential to protecting the assets of your business should you hire contract workers or work with outside entities such as tax professionals or accountants; importers and exporters or brokers of any kind. Specific types of commercial surety bonds include:
- Court Bonds
- License & Permit Surety Bonds
- Farm Labor Surety Bonds
- Lease Guarantee Surety Bonds
- Liquor Tax Surety and Mixed Beverage Bonds
- Lost Title Surety Bonds
- Lottery Surety Bonds
- Sales Tax Surety Bonds
- Utility Deposit Surety Bonds
- Notary Bonds
- Receiver’s Bonds
At CGIS we issue surety bonds to a wide variety of industries and businesses. We’ll evaluate your business based on credit, financials and experience to determine the level of surety credit extended. Our goal is to protect our client’s assets and shareholder value. In many cases, a bond can be issued within a matter of minutes.
Our risk management and loss mitigation services complement our clients on a local, national and international level. We’re here to help protect your business. Contact us today for more information about occupational accident insurance coverage.