Commercial Surety Bonds

At Surety Bonds Agent, we offer a full range of commercial surety bonds nationwide through an extended carrier network. Continue below to learn more about commercial bonds, both mandatory and voluntary. If you have additional questions or want to explore bonding solutions for your business, speak with one of our knowledgeable surety bond experts.

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What Are Commercial Bonds?

Commercial bonds are often referred to as business bonds or commercial surety bonds, because that’s exactly what they are—surety bonds that guarantee some aspect of a business’s commercial activities. Some are mandatory, required as a condition for doing business legally, while others are voluntary, purchased by business owners for their own protection.

Mandatory bonds are those that are required by a federal, state or local agency in order for a business to operate legally. Every mandatory surety bond agreement is a legally binding contract among three parties, each of whom is referred to using the same terms regardless of the specific type of surety bond:

  • The “obligee” is the party requiring the purhase of the bond.
  • The “principal” is the party purchasing the bond.
  • The “surety” is the company underwriting and issuing the bond.

Another thing that all mandatory surety bonds have in common is that the principal must comply with all terms and conditions of the surety bond agreement or risk having claims filed against the bond, which the principal is legally obligated to pay.

Voluntary commercial bonds function more like an insurance policy. There is no obligee requiring a business owner to buy one. Business owners may voluntarily buy certain commercial surety bonds for their own financial protection and/or that of their clients. 

Common Commercial Bonds

Here are some of the most common commercial surety bonds. If you don’t see what you’re looking for here, we likely still offer it. For assistance, contact one of our knowledgeable surety bond agents.

Fidelity bonds is a blanket term that encompasses both bonds that provide protection for business owners against financial loss resulting from employee dishonesty and bonds that provide similar protection for clients.

 

Employee Dishonesty Bonds protect business owners against financial loss due to employee theft, forgery, fraud, or other crime. If desired, the contract can be tailored to cover the dishonest acts of contract employees as well as those on the payroll. It can also cover only a few named employees or all employees. 

 

At Surety Bonds Agent, we offer a full range of commercial surety bonds nationwide through an extended carrier network. Continue below to learn more about commercial bonds, both mandatory and voluntary. If you have additional questions or want to explore bonding solutions for your business, speak with one of our knowledgeable surety bond experts.

CONTACT US FOR A

FREE COMMERCIAL BOND QUOTE

What Are Commercial Bonds?

Commercial bonds are often referred to as business bonds or commercial surety bonds, because that’s exactly what they are—surety bonds that guarantee some aspect of a business’s commercial activities. Some are mandatory, required as a condition for doing business legally, while others are voluntary, purchased by business owners for their own protection.

Mandatory bonds are those that are required by a federal, state or local agency in order for a business to operate legally. Every mandatory surety bond agreement is a legally binding contract among three parties, each of whom is referred to using the same terms regardless of the specific type of surety bond:

  • The “obligee” is the party requiring the purhase of the bond.
  • The “principal” is the party purchasing the bond.
  • The “surety” is the company underwriting and issuing the bond.

Another thing that all mandatory surety bonds have in common is that the principal must comply with all terms and conditions of the surety bond agreement or risk having claims filed against the bond, which the principal is legally obligated to pay.

Voluntary commercial bonds function more like an insurance policy. There is no obligee requiring a business owner to buy one. Business owners may voluntarily buy certain commercial surety bonds for their own financial protection and/or that of their clients. 

Common Commercial Bonds

Here are some of the most common commercial surety bonds. If you don’t see what you’re looking for here, we likely still offer it. For assistance, contact one of our knowledgeable surety bond agents.

Fidelity bonds is a blanket term that encompasses both bonds that provide protection for business owners against financial loss resulting from employee dishonesty and bonds that provide similar protection for clients.

Employee Dishonesty Bonds protect business owners against financial loss due to employee theft, forgery, fraud, or other crime. If desired, the contract can be tailored to cover the dishonest acts of contract employees as well as those on the payroll. It can also cover only a few named employees or all employees. 

 

Business Service Bonds

The term “business service bonds” is often used interchangeably with “employee dishonesty bonds,” but these are actually two different types of commercial surety bonds. Business service bonds protect a business’s clients against loss due to theft by the company’s employees. They are particularly important for companies that send employees to do work at a client’s residence or place of business, such as landcaping, housepainting, cleaning firms, or home health care agencies.

Janitorial bonds are one specific type of business service bond. They may also be called cleaning bonds or janitorial service bonds. They are designed specifically for companies that send their employees into the homes of residential clients or the business premises of commercial clients.

 

Financial institution bonds are fidelity bonds purchased by banks, credit unions, broker/dealers, insurers, mortgage bankers and lenders, and the like. While coverages are tailored according to the principal’s specific business activities, core coverages typically include employee theft, forgery, computer crimes, counterfeiting, safe burglary, and more.

 

Utility companies may require new commercial customers to purchase a surety bond before the utility will be turned on. This is most common when the customer is expected to have very high utility bills, which is typical of retail operations, hospitals, office building, sports venues, and so on. If the utility customer fails to pay its bills, the utility company (the obligee) can file a claim for payment against the utility bond.

 

Each state has its own process for titling vehicles when the original title has been lost, stolen or was never in the current owner’s possession. Purchasing a lost title bond is typically part of that process. The state’s DMV (the obligee) requires the person claiming ownership of a vehicle with no title to purchase a lost title bond before the vehicle can be registered or sold. If someone shows up after a new title has been issued and can prove ownership of the vehicle, the bonded individual (the principal) is obligated to compensate the true owner.

 

States that operate lotteries have a vested interest in maintaining the legitimacy of those games and protecting the revenues the state receives from them. By requiring sellers of lottery tickets to purchase a lottery bond, the state (the obligee) ensures that proper sales and reporting procedures are followed and that sellers remit the proceeds from ticket sales to the state. 

   

Each state has its own process for licensing businesses involved in the alcoholic beverage industry. In many cases, purchasing an alcohol surety bond is a requirement for licensing. The requirement may be at either the municipality level, county level, or state level. The purpose of this type of commercial bond is to ensure that the licensee operates in compliance with the relevant alcohol laws and makes all required tax payments.

   

State and local governments that charge sales tax on purchases of goods and/or services typically require businesses that collect sales tax from consumers to purchase a sales tax bond. The bond is the business owner’s guarantee to remit sales taxes collected from customers.

   

A union bond is a unionized business’s guarantee to live up to its obligations to employees under the terms of the union contract. That can include paying wages and making pension contributions. Other names for union bonds include wage bonds, union wage bonds, wage and welfare bonds, and welfare fund bonds.

   

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