A bond is a three-party contract in which one party, the surety, guarantees the performance or honesty of a second party, the principal (obligor), to the third party (oblige) to whom the performance or debt is owed.
Bond insurance, also known as "financial guaranty insurance", is a type of insurance whereby an insurance company guarantees scheduled payments of interest and principal on a bond or other security in the event of a payment default by the issuer of the bond or security. There are many different types of bonds available. The most popular bonds include:
Bonds that are used to pre-qualify contractors submitting proposals on contracts. A bid bond is a guarantee by the bidder that they will honor the terms of the bid to the project owner. If the bidder fails to honor the terms, the owner will be compensated.
A performance bond guarantees that the contractor will faithfully perform the terms and conditions of the written contract. It protects the project owner from financial loss should the contractor fail to perform the duties as outlined in the contract.
This type of bond is a guarantee against defective workmanship, design or materials for a specified period of time after a job is complete. Standard bonds are typically one year; however, they can range from one to seven years.
These type of bonds are required to obtain a license or permit in cities, counties, states or other political subdivisions. It guarantees that the party seeing the license or permit will company with applicable laws and regulations.
This type of bond provides a financial guarantee against loss due to dishonesty and lack of faithful performance by a public official.
This is a type of bond that protects the public from financial harm resulting from the wrongdoing or improper actions of notaries
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