The main type of bonds on the market today are known as surety bonds. These bonds are required by anyone who administers public or private funds, or for individuals or businesses that require licenses or permits in order to operate in their trade, profession, or business. This includes a long list of licensed trades people, agents, and others who are in a regulated profession or business.
These bonds can be viewed as like a third party contract. An insurance company or bonding company acts as the guarantor or surety for one individual or business. This individual or company then performs a service and is known as the obligee. They assume the responsibilities of liabilities of a third party that is known as the principal.
To give an example of how this works, say a taxi cab company wants to open a business in Sun City. They go to the county office and fill out the necessary paperwork. They are also told that they must provide a form of surety to protect the county from any liabilities or damages that the taxi cab operator might incur. The taxi cab company goes to a bonding company, who provides the necessary bonds. In this example, the bonding company is the surety, the taxi cab company is the obligee, and the county is the principal.
Surety bonds play an important and ever increasing role in today’s business environment. They allow the risks and liabilities to be managed and controlled in a way that doesn’t prevent individuals from entering into any number of worthwhile professions and businesses. They protect municipalities and their officials from the liabilities and actions of individuals and business owners, and they protect the consumer by ensuring that only licensed businesses operate in areas where there is great potential for human and financial catastrophe.
There are many other different types of surety bonds, and some of the major ones are used by the court system to process criminal cases and allow appeals. If there are no bail bonding processes, then the courts quickly clog up and there is no space to hold all of the defendants who await trial under court or appeal bonds.
In construction, these bonds are often used to ensure compliance with local or municipal by-laws or regulations, or to cover the city in the case of damages and liabilities that might arise in the construction or demolition period. They are also used for specific events or activities related to construction such as drilling, blasting, or even the closure of streets and sidewalks.
Any activity that requires a permit by city or county officials will almost always come with the condition to post surety bonds and liability insurance. In the case of any special or public event, this is to indemnify the city from any damages or liability that may occur in the course of these events. Until they receive this assurance, they are unlikely to allow the event permit to be issued.
Contact www.bfbond.com to learn more about the many bond services that can help you and your business succeed.