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September 18, 2014

3 Common Surety Bonds

woman working on computerMany people don’t know what surety bonds are, let alone the fact that there are many types of surety bonds available for purchase. When you hire a contractor, plumber, electrician or anyone else to perform work in your home or place of business, it’s beneficial to hire a bonded professional. Why? If that contractor does not complete the work as promised or makes a costly error, the company that issued his or her bond is responsible for any resulting financial losses, including hiring another professional to finish/fix the job. A surety bond acts as a guarantee that the principal will perform a job according to an agreed-upon contract. Below, we detail three of the most common surety bonds and their sub-categories.

Commercial Surety Bonds

  • License bond: Ensures that the bonded individual or business will obtain any required licenses or permits to meet city, county or state laws.
  • Sales tax bond: Ensures that the bonded business will transfer all collected sales tax to the state government.
  • Auto dealer bond: Ensures that a motor vehicle dealer is licensed and therefore legally qualified to sell vehicles for profit.

Contract Surety Bonds

  • Payment bond: Often issued with performance bonds, this ensures the payment of suppliers and sub-contractors for their contributions to the bonded project.
  • Bid bond: Ensures that the bonded contractor who is awarded a project after placing a bid will post a performance bond and begin work on the project in a timely manner.
  • Performance bond: Ensures that if a bonded individual or business doesn’t perform, the client can receive compensation for monetary loss.

Fidelity Surety Bonds

  • This ensures an employer’s protection from dishonest and/or fraudulent employees, including acts of theft and embezzlement.

We’re happy to explain bonds in further detail. Call Pan American Insurance at (915) 562-0009 for more information on El Paso surety bonds.

Categories: Blog

Tags: bonds, el paso, surety bonds, texas, tips

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