An attachment is really a legal contract that involves three parties: (1) The bonded party (the client seeking the bond), also called the Principal, (2) the obligee or the party that is requesting the bond from the client or usually the one who is the recipient of an obligation, and (3) the surety (insurance company), also called Obligor who assures the obligee that the principal can perform the task.
It is important to recognize that the bond is not an insurance policy. Bond pays for damages due to not meeting conditions, not enough completion, a dishonest behavior, etc. Insurance pays for damages due to an accident. premium bonds to invest
A surety bond, like, is really a guarantee that the Principal in the bond, will perform the "obligations" as stated in the bond contract. For example, these obligations may be completing a project on a certain date, performing certain tasks according to village codes, etc. When the Principal has met the conditions, the bond becomes "void" ;.The language of the bond normally holds both Principal and the Surety the responsibility to meet up the terms of the bonds, jointly and severely - and thus the Obligee could go after either party or both party in case of not satisfying the terms of the bond.
You can find hundreds types bonds. They include:
- Auto Dealer Bonds: An attachment required by many states for new ventures in the used car dealership.
- Bid Bonds: Provide guarantees that certain individuals will sign the contracts when they are bidding and the bid is awarded to those people.
- Broker Bonds: An attachment covering a wide selection of brokers, like insurance brokers, mortgage brokers, property brokers, etc.
- Cigarette Tax Bonds: An attachment required by the federal government from tobacco distributors, to be sure they'll pay the taxes.
- Completion Bonds: A guarantee that the project is likely to be completed on or before a certain date, regardless.
- Contractor License Bonds: Local and federal governments may request from certain contractors to own contractor bond, to ensure that the governmental body to grant license for the contractor to operate at a particular place.
- Customs Bonds. Required by the government (US Customs) from importers.
- DME Bonds: Bonds required by the government (Medicare) from the Distributor of Medical Equipments.
- Fidelity Bonds: Guarantee having less harmful or dishonest acts of certain individuals (employees, for example.)
- Freight Broker Bond (aka ICC Bond, or BMC-84) An attachment that the federal government body (FMCSA) requires from all transportation/ freight brokers to operate - to guarantee delivery.
- Fuel Tax Bonds: An attachment to guarantee payment of truckers of fuel taxes sold in a particular area.
- Jail Bonds: Guarantee an individual will get back to jail/court on/ before a particular date.
- License and Permit Bonds: A type of bonds, not really a type. This category includes contractors bonds, auto dealers, brokers, and other types.
- Liquor Tax Bonds: An attachment to guarantee that who owns a liquor establishment will probably pay liquor taxes to the government.
- Lottery Bonds: An attachment that the establishments with state lotto machine are expected to own to guarantee payments of lotto money to the state.
- Mortgage Banker/ Lender Bonds: Different as mortgage broker. This bond guarantees that the lending institution will probably stay glued to the state laws related to lending.
- Payment Bonds: Guarantee certain payments are created by way of a specific date.
- Payday Loan Bonds: Bonds that guarantees that payday lenders are operating per the state laws and rules.
- Sales Tax Bonds: A Bond that guarantees the payment of sales tax to the government.
- Title Agency Bonds: Required by many local governments to guarantee the title agents.
- Utility Bonds: Used to guarantees the payment of the utility bills in timely manner.
Cost of bonds
The expense of the band depends upon the total amount of the bond, the credit of the Principal, and the type of the bond. For example a $10,000 contractor bond is less when compared to a $50,000 similar bond. Some bonds require strict credit and financial underwriting. A $20,000 used car dealer bond could sell at under $200 for anyone with good credit, but could cost $1,500 (or even be not available) for anyone with bad credit. Insurance companies also compete among each other, so a relationship that costs $100 with a business could cost $50 with an alternative company.
