A surety bond is a three-party contract between you and a surety company and the other party. If you fail to live up to your bonded obligations, the surety company will pay the other party up to the amount of the bond.
There are thousands of types of surety bonds available to both commercial industries and to consumers. While many types of surety bonds are common to purchase, there are three types that are obtained more than the others.
A contract bond, also known as a performance bond, protects the interests of all parties in a contract. A contract bond ensures that the terms of a contract are fulfilled, no matter what issue may arise. Don’t let a contract loophole cancel your project.
Contract bonds come in two main types: payment bonds and performance bonds. Payment bonds ensure that the company with whom you are contracting will pay for materials or services provided. If they don’t pay, you can file a claim against the bond and be reimbursed for your losses. Performance bonds protect both parties from non-performance issues by ensuring that someone is accountable for delivering on their promises and following through with their obligations.
A fidelity bond covers losses from employee theft or dishonesty, such as embezzlement or misappropriation of funds. It’s intended to protect against losses caused by dishonest acts of an employee that result in financial loss to their employer. The bond also covers any act committed with the intent to defraud or with reckless disregard for its consequences. It may also cover damages caused by intentional acts of negligence on behalf of employees acting outside their scope of employment.
Vehicle title bonds
A vehicle title bond is a surety bond required by state law in order to obtain a bonded title for a vehicle. If you are applying to the DMV to get a bonded title, the DMV will require that you have the vehicle title bond before they will issue the title. Having the bond protects the DMV and the buyer in case of fraud or false information provided by the seller on the application.
Like all things in life, there’s a large variety of surety bonds on the market. It is critical to understand what each bond is and isn’t so that you can select the right bond to fit your particular type of agreement. If you are looking for a surety bond, or just want to learn a little bit more about the business and personal side of surety bonds, we have everything you need to know about them. Get in touch with us at ProBonds.com today!