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These surety bonds are general for all states.
Learn more about guarantee bonds, and apply today. Single Source Insurance offers surety bonds nationwide through a convenient online application system.
Often referred to as financial guarantee bonds or commercial financial guarantee bonds, these are very common surety bonds that provide an unconditional guarantee of payment of a financial obligation.
Some of these bonds, such as�alcohol or tobacco tax bonds, are license and permit surety bonds that guarantee both the lawful and ethical performance of the bonded party and the payment of a financial obligation. Others guarantee only the payment of a financial obligation in accordance with the terms of the bond, such as utility deposit bonds.
Financial guarantee bonds are required in a number of professions and industries. The party requiring the bond (the obligee) is most often a government agency that issues licenses or work permits to businesses that want to operate within the state or that is soliciting contractor bids on a public works project. In other cases, the obligee is a private entity, such as a utility company or a private developer seeking bids on a privately funded construction project.
The obligee establishes the requirement and the terms of the surety bond. The party required to purchase the bond is the principal, who pays a premium to obtain the bond as a guarantee that the terms of the bond will be met.
If the principal fails to carry out some aspect of the job or to make a payment as guaranteed, the obligee or other injured party has the right to file a claim against the financial guarantee bond. The surety that underwrote and issued the bond will then step in. Once the surety determines that a claim is valid, the claimant will be paid up to the full amount of the bond, and the surety will in turn collect a reimbursement from the principal.
There are two factors in determining the cost. The required bond amount is established by the obligee. The premium rate you will pay is set on a case-by-case basis by the surety. The surety�s main concern is the principal�s ability to repay any claims the surety pays out on the bond. Because of this, the principal�s credit score and financial condition are of paramount importance in deciding whether or not to issue a bond and in setting the premium rate.
Applicants with good credit typically pay in the range of 1% to 3% of the required bond amount as the annual bond premium. Applicants with poor credit can pay as much as 15%.
Our experienced surety bond professionals will gladly answer any questions you may have about any type of financial guarantee bond. Apply online today!
