subject: Types Of Surety Bonds [print this page] If you are a business, offering services that must be completed as stipulated by a formal contract, chances are you have heard of the term surety bonds. It is important to educate yourself about it Maryland for your case specific situation. Designed as an insurance policy that will assure the company or individual binded by the contract will live up to their promises, it is basically a policy that will pay the customer or principal in the event the promising party defaults on the contract. If you are required to carry a it for licensing, contracts, or court orders, review the bonds listed below to get an understanding of which type you will need to obtain.
Contract
Contract and performance are the most common type of bond secured. Simply stated, it is designed to guarantee that a contract pans out as the terms and conditions require in the written promise. Within this category, there are a number of different sub categories. Some contract performance bonds include bid, performance, and payment. While bid will guarantee the contractor will enter into the contract if they are the lowest bidder, a payment bondwill guarantees vendors, subcontractors and laborers will be paid.
License
If you are required to carry a license issued by your state or local legislature, chances are you are required to carry a license and permits bond to ensure you will comply with codes and regulations established by the state or local entities. Electricians, plumbers, general contractors, and other licensed professionals providing services to the community will be required to maintain a license bond to satisfy state or local laws.
Probate and Other Court
A probate bond is designed to guarantee honest accounting for individuals managing the estate or finances of the deceased, minors, and the disabled. These will most commonly be required when the court directs assets to be distributed or managed.
As you can see, both individuals and professionals may require a surety bond at one time in their life. Understanding how the it protects both the business and the customer receiving services is extremely important. If you are a professional, securing a surety bond will look great on your business resume. Invest in a comprehensive insurance portfolio and protect your business and your clients.
