The idea behind surety bonding is simple. One person guarantees to another that a third person will perform. This concept is not new, in fact the Bible refers to surety bonding in Proverbs 11:15. "He that is surety for a stranger shall smart for it, and he that hateth suretyship is sure." However, the ancients used individuals instead of surety bond companies, and these individuals often proved to be unreliable. The earliest recorded attempt to form a company to engage in the surety business was in 1720. And in 1865, the United States' first corporate surety bonding company, the Fidelity Insurance Company, was formed.
Bid Bonds, Performance Bonds, Payment Bonds, Maintenance Bonds, and Supply Bonds. These bonds are required by state or federal law for most public construction projects or by the project owner. More private owners are using surety bonds as a way to ensure project completion.
This type of bond is given by a Court Fiduciary to secure the faithful performance of fiduciaries' duties and compliance with the orders of the court having jurisdiction.
This type of bond is required when litigants seek to avail themselves of privileges or remedies which are allowed by the law only upon condition that a bond with surety be furnished for the protection of the opposing litigant or other interested party. Typical bonds within this category include Injunction, Appeal, Indemnity to Sheriff, Mechanic's Lien, Attachment, Replevin, and Admiralty.
This category consists of any bond required by state law, municipal ordinance, regulation, and in some instances, the federal government or its agencies, as a condition precedent to the granting of a license to engage in a particular business or the granting of a permit to exercise a particular privilege. In general, the terms "License" and "Permit" are used interchangeably. Typical bonds within this category include Contractors' License Bonds, Motor Vehicle Dealer Bonds, Securities Dealers' Blue Sky Bonds, Employment Agency Bonds, Health Spa Bonds, Grain Warehouse Bonds, Liquor Bonds, Cigarette Tax Bonds, and Sales Tax Bonds.
This type of bond guarantees the faithful performance of duty by a public official in a position of trust. Such bonds are given to comply with federal or state statutes and, therefore, guarantee whatever liability that state imposes. Typical bonds within this category include Treasurers, Tax Collectors, Sheriffs, Constables, Judges, Court Clerks, and Notaries.
Various agencies of the federal government require or accept surety bonds for a number of different obligations, such as Medicare and Medicaid Provider Bonds, Immigrant Bonds, Excise Bonds, Custom Bonds, and Alcoholics Beverage Bonds.
This category includes other types of bonds that do not fall into the categories outlined above, such as Lost Securities Bonds, Lease Bonds, Bonds to Guarantee Payment of Utility Bills or Return of Borrowed Property, Bonds to Guarantee Employer Contributions for Union Fringe Benefits, and Workers' Compensation Bonds for Self-Insurers. Procurement of these bonds is not always guaranteed. Things You Should Know About Surety Bonds