TUESDAY, MARCH 7, 2023
Many people don’t know what surety bonds are, let alone the fact that there are many types of surety bonds available for purchase. When you hire a contractor, plumber, electrician or anyone else to perform work in your home or place of business, it’s beneficial to hire a bonded professional. Why? If that contractor does not complete the work as promised or makes a costly error, the company that issued his or her bond is responsible for any resulting financial losses, including hiring another professional to finish/fix the job. A surety bond acts as a guarantee that the principal will perform a job according to an agreed-upon contract. Below, we detail three of the most common surety bonds and their sub-categories.
Commercial Surety Bonds
- License bond: Ensures that the bonded individual or business will obtain any required licenses or permits to meet city, county or state laws.
- Sales tax bond: Ensures that the bonded business will transfer all collected sales tax to the state government.
- Auto dealer bond: Ensures that a motor vehicle dealer is licensed and therefore legally qualified to sell vehicles for profit.
Contract Surety Bonds
- Payment bond: Often issued with performance bonds, this ensures the payment of suppliers and sub-contractors for their contributions to the bonded project.
- Bid bond: Ensures that the bonded contractor who is awarded a project after placing a bid will post a performance bond and begin work on the project in a timely manner.
- Performance bond: Ensures that if a bonded individual or business doesn’t perform, the client can receive compensation for monetary loss.
Fidelity Surety Bonds
This ensures an employer’s protection from dishonest and/or fraudulent employees, including acts of theft and embezzlement.
We’re happy to explain bonds in further detail. Call Mike Dyer Insurance Agencies for more information on Tennessee surety bonds.
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