Surety Bonds

Depending on the nature of your business, securing a surety bond might be essential to your operation. Surety bonds help you win contracts, secure funding, and meet legal obligations to provide certain services. Unfortunately, there is no standard size for surety bonds. Different projects require different amounts and different timetables. The insurance professionals at Buffalo insurance can help you find the exact type of surety bond you need at a price that fits your budget. 

What Are Surety Bonds? 

A surety bond is a legal contract that guarantees legal obligations are met. In the event that the obligations of the contract are not met, a recompense will be paid in order to pay for the unmet obligations. Functionally, it is a form of financial credit and is sometimes known as a bond guarantee. 

There are three different parties who are always involved in a surety bond: the obligee, the principal, and the surety. The obligee is the person who is protected from losses through the surety bond. In the event of a default, the obligee is paid up to the amount of the bond to compensate them for the breach of contract. The principal is the person who has the obligation under the contract. The oblige gets a surety bond to ensure they will be paid if the principal does not live up to their end of the bargain. The surety is the entity that pays the obligee in the case of default. Surety bonds are not insurance. However, insurance companies usually act as the surety agent, but other organizations can also assume that role. 

Uses of Surety Bonds

Surety bonds cover many different types of contracts and obligations, so a wide variety of businesses need them in order to operate in Norman, Oklahoma. Surety bonds are necessary for many contractors or other businesses who fulfill government contracts. There are many types of surety bonds; however, there are a few general uses for surety bonds: contract surety, construction surety, and fidelity surety.

Contract Surety

Contract surety bonds are often used for construction projects. They are used to protect business owners from the possibility of a contractor not living up to their contract. For instance, if you have a construction project that requires contractor work in Norman, Oklahoma, surety bonds that provide contract surety will pay you if the contractor does not meet their deadline. There are multiple types of contract surety bonds available for anyone who is working with a contractor in Norman, Oklahoma:

Bid Bond

Bid bonds are used to ensure that contractors honor the terms of any bid they submit. They are also used to ensure that a contractor follows through on the project and does not withdraw from a project if they have the winning bid. 

Maintenance Bond

Maintenance bonds project business owners from losses due to defective workmanship or from faulty materials or equipment. That is why maintenance bonds are also sometimes referred to as warranty bonds. Typically, these bonds are in force for a period of one or two years. 

Payment Bond

Payment bonds are required for nearly all large construction projects, whether they are a commercial project or a government project. They ensure that contractors live up to any payment obligations they have in order to perform their contracted work, such as payments to material suppliers, laborers, or even subcontractors. 

Performance Bond

Performance bonds are often linked to bid bonds. They are used to guarantee that a contractor completes a project under the specified terms of the bid. 

Commercial Surety

Commercial surety bonds are used to protect government, legal, and public entities from risk and ensure that security requirements are upheld. Basically, commercial surety bonds guarantee that legal requirements are upheld by individuals and businesses who enter into contracts with government, legal, and public entities. There are multiple types of commercial surety bonds available for business owners in Norman, Oklahoma: 

License and Permit Bonds

These bonds are usually required by the government when professionals apply for a license or a permit for a project. Typically, these types of commercial surety bonds are taken out by contractors, electricians, etc. 

Mortgage Broker Bonds

Mortgage broker bonds protect borrowers when they work with mortgage brokers. They are used to ensure that mortgage brokers follow all laws and guidelines and protect the borrower in the event of impropriety. 

Other Types of Commercial Bonds

Many industries require specialty commercial bonds that are specific to their operations. Warehouse companies, liquor stores, and agricultural companies are just a few of the many types of businesses that also require commercial bonds. 

Fidelity Surety

Fidelity surety bonds are used by companies to protect themselves from employee theft and dishonesty. They are essential for businesses that use a lot of cash in their day-to-day operations. There are several types of fidelity surety bonds used by businesses in Norman, Oklahoma: 

Business Services Bonds

Business services bonds protect customers and clients, as well as business owners from liability due to employee theft or harm to customer assets. 

Employee Dishonesty Bonds

Employee dishonesty bonds are often used by nonprofit organizations. They are designed to protect the nonprofit or business from losses caused by employee dishonesty. 

ERISA Bonds

ERISA bonds are used by pension plans and institutional investors. They are used to protect pension plan participants from malfeasance by those who are in charge of the pension plans. 

Buffalo Insurance Has the Surety Bonds You Need

Buffalo Insurance works with hundreds of providers to find the exact type of surety bond that is needed by your business to operate in Norman, Oklahoma. Surety bonds come in all sorts of shapes and sizes, and finding the right one can make or break whether you will get a lucrative contract. Do not leave it up to chance when it comes to finding a broker who can get you exactly what you need when you need it. Join the herd and know that the commercial insurance experts will give you the exact type of protection you need at a price that works within your budget. Contact us today and feel the protection and comfort that comes with being a member of the herd.