Types of Individual Surety Bonds

2008-09-25 11:39:21

( Financial )



What is a Surety Bond?

Individuals go into agreements with one another, where one provides certain goods or services to another. For instance, you hire a contractor to remodel your home at a predetermined price, and he is supposed to deliver to you whatever you have agreed on.

However, things can go wrong in the deal, and one or both parties suffer losses or damage. Your contractor may not be able to finish the remodeling job on the promised date due to lack of materials, or because he or his workmen fell ill, or simply due to his own negligence. On the other, you may have already paid him part of the agreed price. You suffer anxiety from the unfinished work and are forced to look for another contractor.

But if the contractor had bought an individual surety bond from a third party, you could have been duly compensated for the unfinished job. A surety bond provides a documented guarantee that he would have fulfilled his obligation, or compensate you in the event that he failed to do so. Like insurance, a surety bond provides protection against unforeseen circumstances that will cause irregularities or non-fulfillment of a contract between two parties.

What are the Most Common Types of Individual Surety Bonds?

Each individual surety bond protects both parties against specific circumstances.

The most common type is the employee's fidelity bond, which guarantees his honesty and proper adherence to his employer's company rules and policies.

In case you were arrested or charged for a crime, you can keep yourself out of jail by getting a bail bond. This guarantees that you will not fail to make a court appearance to answer for the accusations.

Agent or broker bonds assure clients that they are dealing with forthright and honest people who will deliver what was promised in the purchase contract.

Your landlord may require you to provide a lease bond to assure him that you will be able to comply with monthly rental payments.

As a professional, you can also obtain an individual surety bond to assure your clients that you will perform your duties and services properly.

Where do You Get Individual Surety Bonds?

Many insurance and surety companies sell individual surety bond. Some specialize in only one type of bond, while others can offer several types. You can look up the companies on the internet to find out what types they sell.

Most individual surety bonds are good for a few months to a year, depending upon your needs.


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