What is a surety bond?
A surety bond is a promise or guarantee to pay one party a certain amount if the second party fails to meet their obligations, such as fulfilling terms of their contract. This bond will protect against losses resulting from failing to meet that obligation.
Rhodes Risk Advisors surety professionals have developed strong relationships with the brokers and companies involved in the bonding process. We are able to facilitate all aspects of surety bonding for commercial, subdivision, contract, and construction surety.
What types of surety bonds are offered?
Contract Surety Bond
The contract (or corporate) surety bond provides financial security and construction assurance for building and construction projects by assuring the project owner (obligee) that the contractor (principal) will perform the work and compensate certain subcontractors, laborers and material suppliers, as outlined via their contract. Contract surety bonds include:
- Bid bonds: provide financial assurance that the bid has been submitted in good faith and that the contractor intends to enter into the contract at the price bid and provide the required performance and payment bonds.
- Performance bonds: protect the owner from financial loss should the contractor fail to perform the contract in accordance with its terms and conditions.
- Payment bonds: guarantee that the contractor will pay certain subcontractors, laborers and material suppliers associated with the project.
- Maintenance bonds: guarantee against defective workmanship or materials for a specified period.
- Subdivision bonds: make guarantees to cities, counties or states that the principal will finance and construct certain improvements such as streets, sidewalks, curbs, gutters, sewers and drainage systems.
Commercial Surety Bond
Commercial surety bonds guarantee performance by the principal of the obligation or undertaking described in the bond. Commercial surety bonds include:
- License and permit bonds: required by state law or local regulations in order to obtain a license or permit to engage in a particular business (contractors, motor vehicle dealers, securities dealers, employment agencies, health spas, grain warehouses, liquor and sales tax).
- Judicial and probate bonds (also referred to as fiduciary bonds): secure the performance on a fiduciaries’ duties and compliance with court orders (administrators, executors, guardians, trustees of a will, liquidators, receivers and masters). Judicial proceedings court bonds include injunction, appeal, indemnity to sheriff, mechanic’s lien, attachment, replevin and admiralty.
- Public official bonds: guarantee the performance of duty by a public official, (treasurers, tax collectors, sheriffs, judges, court clerks and notaries).
- Federal (non-contract) bonds: required by the federal government (Medicare and Medicaid providers, customs, immigrants, excise and alcoholic beverage).
- Miscellaneous bond: include lost securities, lease, guarantee payment of utility bills, guarantee employer contributions for union fringe benefits and workers’ compensation for self-insurers.
