Commercial Surety Bonds
The four primary categories of common commercial surety bonds are listed below with a brief description of the bonds purpose. There are literally thousands of different bond types specific to the four primary categories shown below:
- Commerical Bonds - guarantee the principal's performance of an obligation as listed on the bond. (e.g. Auto Dealer Bond, Mortgage Broker Bond, Wage & Welfare Bond, etc.)
- Contract Bonds - guarantee the contractor (principal) will perform the work and pay their suppliers, subcontractors, and laborers. (e.g. Bid Bond, Performance Bond, Subdivision Bond, etc.)
- Court Bonds - also known as fiduciary bonds; guarantee the performance of fiduciary services in compliance with a court order. (e.g. Guardianship Bond, Executor Bond, etc.)
- Fidelity Bonds - are not surety bonds, but a type of insurance. A fidelity bond is not a surety bond, but a form of insurance. A fidelity policy insures against employee theft. For instance, if a company's bookkeeper were embezzling funds, a claim could be filed. The bond would pay out if a court found the individual guilty as charged.
Special Note: This summary outlines in general terms the coverages afforded under some policies. Examine the policy carefully for any exclusions, limitations, or any other terms or conditions that may specifically affect coverage. The terms and conditions of the policy prevail.