Surety bonds provide an excellent risk mitigation tool for your business. They are designed to guarantee performance given a particular set of risks. It is a promise by a surety or guarantor to pay one party (the obligee) a certain amount if the second party (the principal) fails to meet an obligation, such as fulfilling the terms of a contract.
Surety bonds offer another layer of protection in three-way agreements where loss is not expected, but do involve payment if things don’t go as planned. The First Baldwin Insurance team is well-educated on the range of surety bonds available to protect your business and any agreements required or needed to ensure peace of mind that any contracts will be fulfilled and any duties promised will be faithfully performed.
Some of the most common types of surety bonds include:
- Bid Bonds – Gives protection to a project owner (obligee) if a successful bidder does not enter a contract and doesn’t provide required surety bonds or other security
- Performance Bond – Protects the obligee if the contractor defaults on obligations under a bonded contract
- Payment Bond – Guarantees the contractor will pay the subcontractor, labor and material bills associated with a construction project
- License and Permit Bonds – Required by state, municipal or federal ordinance or regulation to engage in a particular business or exercise a certain privilege
- Public Official Bonds – Required by statute for certain public officials to protect from malfeasance or ensure faithful performance of duties