Commercial Surety Bonds

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.