There are a broad group of surety bonds that don’t fit into the standard classifications of contract and commercial. They often support private relationships and unique business needs such as lost instruments and public official bonds.
Generally, a surety bond involves three parties: the principal, obligee and surety company. The obligee is guaranteed indemnification or compensation from the surety company if a claim is made against them.
License and Permit Bonds
License and Permit Bonds guarantee that a business or contractor will comply with the codes and laws that govern their industry. If they do not, a consumer can make a claim against the bond to cover financial damages. These bonds are typically required before a professional can begin operating in a given field, like construction, plumbing or janitorial services.
These are one of the most common types of California construction bonds. They generally protect consumers from fraud, incompetence, or poor workmanship by a licensed professional. They also ensure that the business will follow local, state, and federal regulations as well as pay any resulting costs to injured parties.
Other types of miscellaneous commercial bonds include court and probate, fiduciary and public official bonds. These bonds are designed to support a variety of unique business needs that don’t fit into the other broad classifications. They can offer a fixed payout to compensate for losses caused by certain obligations, and often require an up-front premium payment from the principal.
Most of these bonds can be written quickly and easily, even for those with challenging credit profiles. A quick and easy way to find and purchase them is to visit our instant issue bond page and view our list of available bonds by state. However, larger or more complex Bonds are typically subject to a full underwriting process and credit check.
Court Bonds
A wide range of bonds that do not fit into the traditional categories of contract, court, or license and permit bonds are classified as miscellaneous surety bonds. These include ARC bonds for travel agents and utility bonds that guarantee payment of utility bills.
Court bonds, also known as judicial bonds or court surety bonds, guarantee the fulfillment of specific responsibilities by individuals involved in legal proceedings. The most common of these bonds are appeal bonds, which protect the party appealing a judgment against them by guaranteeing they will pay any costs associated with the appeal. Another type of court bond is a seizure protection bond, which guarantees that a sheriff or marshal will be paid for any damages that result from a court-ordered property seizure.
There are other types of court bonds, including restitution and child support bonds, that provide financial compensation to the victims of certain crimes or non-compliance with a court order. For example, if someone does not file for bankruptcy voluntarily, creditors can petition the court to force them to do so by filing a Petition to Forcibly Declare Bankruptcy Bond.
Most court bonds require the principal to show proof of assets or financial responsibility in order to obtain them. This requirement helps the surety company ensure that the principal will fulfill their duties and obligations, resulting in claims against the bond being paid quickly. If the claim is proven to be valid, the principal will then be liable for repaying the surety company, up to the total amount of the claim.
Fiduciary Bonds
A fiduciary bond is a special kind of surety bond that guarantees heirs, beneficiaries, or creditors that a person who has been given power over another’s finances or property will act with honesty and loyalty. This type of bond is often required by the courts in probate proceedings, such as when a judge assigns someone to manage the estate of an incapacitated person or to oversee the property of a minor.
Typically, a fiduciary bond costs between 1% and 3% of the value of the estate or assets that the person in charge has to take care of. However, this cost can increase significantly if the potential fiduciary has bad credit or other issues that make them a higher risk for fraud or theft.
Like most other types of bonds, a fiduciary bond is written up by a surety company provider and then backed by the courts. If the trustee in charge of the estate commits a breach such as embezzlement, the bond will cover up to the amount of the lost funds.
Since fiduciary bonds are so important, it’s crucial that anyone who wants to become one of these individuals undergo a rigorous background check and get their bond in place well ahead of time. This will prevent them from being forced to step down from their position if they can’t pass the necessary checks.
Public Official Bonds
Almost all public officials that hold positions of trust in the community will be required to post this kind of surety bond before they can be sworn in. This type of bond protects the government agency that requested the individual to obtain this bond against any misappropriation of funds or other breach of duty while in office. It also covers any deputies or subordinates of the bonded individual. This is why many of these bonds have a tail, meaning they continue to be in force even after the individual leaves office.
In addition to covering the government, this type of bond is designed to cover individuals that have suffered financial losses as a result of the bond holder’s misconduct. These individuals can file a claim against the bond for reimbursement of the losses.
This is one of the oldest and most common types of surety bonds that are required for governmental entities. It is often required by federal, state and local statutes for a variety of positions including treasurers, tax collectors, sheriffs, coroners, town clerks, trustees, mayors and county commissioners.
Unlike the other types of surety bonds described in this article, most of these commercial bonds do not fall into the fidelity or faithful performance categories. They include such bonds as lost instrument bonds, ERISA bonds, appeal bonds, auto dealer bonds, sales tax bonds, warehouse and title agency bonds and others.