What is Surety
Surety Bond or also known as Financial Guarantee is a three-party contract. This contract includes the principal, whereas, this party is the one who will need to fulfill the contractual obligations. The obligee is the party who is obliged to perform or the recipient of the contractual obligation. Lastly, the surety, who is also known as the insurance company.
Generally, a Surety Bond is a type of Commercial Credit Guarantee, whereas, the surety promises to pay the obligee an indemnity agreement. In the account that party the principal fails to pay its debt or meet its obligations. These include fulfilling terms and conditions in a contract.
In conclusion, the Surety Bond is a protection of an obligee from losses due to the principal's failure to pay its obligations. You can always contact our friendly and licensed agents to ask your questions about bond insurance for small businesses.
Types of Commercial Surety Bonds
Typically, Commercial Bonds are purchased by businesses in correspondence with the permit and licensing regulations. These business bonds are assurance that could protect the business owners from defaults.
Most states require businesses to purchase a Surety Bond that could guarantee they will pay their taxes appropriately in accordance with the law. This bond is often required for companies that sell, warehouse, or produce liquor. Also, who sells other types of alcoholic beverages. With this bond in hand, the company ensures that they are going to pay their taxes at a given time. The policyholder's or the principal's obligations with this bond is to pay all applicable alcohol taxes, as before its due. However, if the principal fails to meet the terms of the surety and the obligee, which is the government, the government entity could file a claim on the bond provider to recover the unpaid fines, penalties, and taxes of the principal.
Most clients often require a business to provide proof of bond before handing over the specified job. For the reason that having a bond could prove that the company is trustworthy and has the credibility to its prior, future, and current client. In most cases, businesses with workers who do their jobs at its client's premises purchase this bond; this is to protect its clients, in case of worker's possible theft.
Employee Theft Bond also referred to as Fidelity Bond, provides an essential advantage to companies. This bond could help businesses from potential losses and bankruptcy resulting from employee theft. Therefore, any business that has its employees access to the valuable assets should bond their employees with this optional type of bond.
Types of Employee Theft Bond
- Name Schedule Fidelity Bond
- Blanket Position Bond
- Primary Commercial Blanket Bond
This bond could cover a list of designated employees in a scheduled form that a business provides to its bond provider. Collecting any claim-payments for this specific type of bond requires proof or any absolute proof that the employee steals an object.
On which this object is an asset to help the business function well. However, coverage could only be applicable if the designated employee at that scheduled time is the one who stole the asset of the company.
Blanket Position Bonds cater blanket insurance to certain positions and not on a list of specific employees. Typically, all employees who work on the business that has a designated position(s) are automatically covered. As well as, its newly hired employees are automatically covered. Additionally, this specific type of Fidelity Bond does not require the business to provide absolute proof that the employee committed theft.
This type of Fidelity Bond covers all business employees, whether the employee has a designated position or none. With this bond, the company could procure a loss settlement claim for the same amount, even if multiple or one employees commits theft.
A License and Permit Bond could guarantee the clients of the bonded business that they will comply with any laws and regulations that were established and will be enforced by local, state, and federal law. All license and permit bonds are modified and customized based on a specific industry. Generally, this bond amount could protect its consumers or the state against any possible losses.
License Bonds could protect the federal government from potential losses that could be carried out by a bonded business's fraudulent malpractices. Additionally, several specific types of businesses are not allowed or are not authorized to operate a business unless they purchase a license and permit bond.
Usually, a bonded title could give the title owner rights the same as standard vehicle titles. In the United States, a bonded title is required if the rightful owner of the vehicle loses its original title or if the title was stolen. However, before the individual could receive a bonded title, he must first procure a certificate of title bond. This certificate should show that monetary assistance is available for the vehicle that will receive the bonded title.
A Sales Tax Bond is a type of financial security that ensures its obligee or the state government that the business will comply with all its applicable sales taxes. Whereas, these taxes are accustomed by local and federal law with a specific deadline. Most states require every retailer and merchant to procure Sales Tax Bonds, as proof that they are responsible and paying their sales taxes and per the laws and regulations.