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.