Commercial surety bond and their types
A bond is a legal tool that binds three parties:
• Principal – the person or the party seeking the bond
• Obligee – person requesting the bond from the principal
• Surety – a company that guarantees the bond
A bond is very different from an insurance policy. A bond is required to fulfill any damage that has occurred due to non-completion of the bond’s requirement.
There are various kinds of surety bonds:
• Bid Bonds
Bid bonds are needed by businesses before taking part in bidding for a contract. The bond ensures that the business will sign the contract if they win the bid.
• Auto dealership bond
It is required to obtain an auto dealership license in any state.
• Cigarette tax bond
Tobacco distributors provide this bond to the government to ensure that they will pay the required taxes.
• Liquor tax bond
Liquor dealers obtain this bond and submit it to the state government to ensure that they will pay the required tax.
• Utility Deposit Bonds
Utility deposit bonds are a type of bond that protects utility companies from your non-payment. It ensures that utility users will pay their utility bill on time.