Types of Bonds

​As an agency specializing in surety bonds, we handle all types of bonds from Performance Bonds to License & Permit Bonds. Below are some brief explanations of commonly needed bonds:
Contract Bonds: Contract Surety Bonds guarantee in general terms that the contractor will perform the obligations of the bonded contract. These bonds are most commonly referred to as bid, performance and payment bonds. Unlike other insurance products, the bond is generally a three party obligation, binding all three parties to each other; each of whom have specific obligations. The Contractor (or Principal) and Surety are bound to the third party. The person or firm to whom the principal and surety owe their obligation is called the “Obligee.” 

The most common type of Contract Bonds include:

Bid Bonds: Bid bonds provides financial assurance that the bid has been submitted in good faith and that the contractor intends to enter the contract at the price bid and provide the required performance & payment bonds, if low. One might find these bonds are often referred to as a Bid Guarantee or Bid Security. 

Performance Bonds: Performance bonds guarantee that the performance of the work will be completed on schedule and in accordance with the plans and specifications as set forth in the contract.

Payment Bonds: Payment bonds assure that the contractor will pay workers, subcontractors and material suppliers. While not mandatory, these bonds are usually written as a companion bond to the Performance Bond.

License & Permit Bonds: License & Permit Surety Bonds are types of commercial surety bonds which are normally required by states and municipalities in order to obtain a license in a given industry or a permit for a certain activity. These bonds ensure that a licensed entity or business will perform its work according to specific state statute(s) which govern or regulate an industry or activity. The state or federal entity will require a bond to go along with the license, so many types of individuals and businesses need this type of bond in order to operate. Typically, a license or permit bond that is required by an agency or municipality in order to conduct an activity are approved and processed within 24 hours.