What Is A Surety Bond? | This post brought to you by: Travelers Insurance
Surety bonds are designed to guarantee performance in the face of a set of particular risks. Each surety bond must be uniquely tailored to meet specific needs. Commercial Insurance Associates provides surety bonding for contractors in Delaware, Maryland, Pennsylvania, New Jersey, Virginia, Florida, and many more states.
A surety bond is an agreement under which one party, the surety, guarantees to another party, the obligee, the performance of an obligation by a third party, the principal.
The most common types of surety are:
Contract Surety Bonds
Contract Surety Bonds are bonds that the government or an owner of a construction project may require a contractor to obtain. If you are bidding a job for DelDOT, New Castle County, or any local government, you will need a contact surety bond. There are three types of contract surety bonds:
- Bid bond – Affords protection to a project owner (obligee) in the event a successful bidder will not enter a contract and will not provide the required surety bonds or other security.
- Performance bond – Provides protection to the obligee if the contractor defaults on its obligations under the bonded contract.
- Payment bond – Guarantees that the contractor will pay subcontractor, labor and material bills associated with the construction project.
Commercial Surety Bonds
Commercial Surety Bonds are required of individuals or businesses by the government, legislation or by other entities. Commercial Insurance Associates provides the following types of commercial surety bonds:
- License and permit bonds – required by state, municipal or federal ordinance or regulation. These bonds may be required as a condition for engaging in a particular business or exercising a particular privilege. Examples include performance and payment bonds, customs bonds, tax bonds and warehouse bonds.
- Fiduciary bonds – required of those who administer a trust under court supervision.
Who Needs a Surety Bond?
Contractors licensed in the following Delaware municipalities are required to be bonded in order to renew their license:
- New Castle County, Delaware
- Newark, Delaware
- Elsmere, Delaware
- Wilmington, Delaware
- Rehoboth Beach, Delaware
- Many more!
If you are doing residential or commercial construction in Delaware, you are almost guaranteed to need a surety bond at some point in your career. Let us be your bonding experts.
Commercial Insurance Associates has access to bond markets all over Delaware, Maryland, Pennsylvania, and more. Do you need to renew your contractors license? Are you pulling permits for a local government? If you are a contractor who bids government jobs, have you shopped your bond rates recently? Give us a call at 302-286-7901 to learn more about our surety bonding services.