Surety Bond Definition and Overview
Surety Bond Definition
Millions of American businesses need permits or licenses to operate: contractors, auto dealers, mortgage brokers and even health spa operators to name just a few. Many of these businesses are required to post a bond, usually with the State, a licensing agency or the entity that is contracting the work, before being allowed to operate. Since you are on our website, there is a very good chance that you are one of those businesses.
Types of Bonds We Offer
While there are hundreds of different kinds of bonds, you can easily find the one you need here at The Ox. We have an extensive bond library from which you can choose, and if you can’t find it there, just tell us what you’re looking for and we’ll find it for you. To make it even easier for you, we have grouped our bonds into two major segments: Bid, Payment & Performance Bonds and Compliance, License & Permit Bonds. Also, see our bond types reference, types and definitions of surety bonds, or our overview of surety bonds offered by state.
Compliance, License & Permit Bonds
Compliance, License & Permit bonds are the hundreds of different bonds that licensing entities, usually a State or a municipality, require prior to issuing a business license. They are required to ensure the person or business obtaining the license complies with the terms of that license and the laws governing it. While there are hundreds of different kinds of bonds, at The Ox you can easily find the one you need from our bond library, where we have contractor license bonds, motor vehicle dealer bonds, mortgage broker or lender bonds, notary bonds and hundreds more.
Bid, Payment & Performance Bonds
Bid, Payment & Performance bonds are used in the construction industry. Contractors obtain bid bonds prior to bidding on a job. This smooths the process of securing a Payment & Performance Bond should they win the contract. Entities hiring contractors often require the contractor to post a Payment & Performance bond (sometimes called contractor bonds or contact bonds) prior to starting the job.
What Is a Surety Bond?
Surety bonds are usually confused for insurance. It is important to realize that they are very different in the way they work and how they are underwritten.
A surety bond is a contract. There are three parties involved. The obligee is the party that is requiring the bond. The principal is the party that will perform the contractual obligation. Finally, the surety bond provider is the party that will be insuring the obligee that the principal will perform the obligations. While the bond issuer will pay the obligee in the event of a claim, it is important to know that the principal is responsible for the damages and is required to repay the bond issuer.
We have a vast library of bonds we offer, and we are set up to get you bonded at the best price possible ASAP.