Bond Frequently Asked Questions
What is a Surety Bond?
A Surety Bond is a bond that guarantees the fulfillment of a legal obligation. It is a three party agreement where the surety company (the third party) guarantees to an obligee or owner (the second party) the successful performance of the principal (the first party). The primary uses of bonds today is to protect private and public funds from financial loss.
Surety bonds are not insurance policies. Insurance policies assume there will be a loss. The premium is calculated to cover the loss that will occur. A bond is an extension of credit with the assumption that the legal obligation will be fulfilled and no loss will occur. The bond premium paid to the surety covers the surety companies underwriting expenses. If a loss occurs, it will have a significant impact on the surety company’s financial results.
Types of Surety Bonds
Different surety needs are met by different types of surety bonds. We only deal with the most trusted sureties with proven records of placing bonds for contractors new to bonded work, difficult bonds due to hazardous work, or contractors with inexperience on larger projects, and those with financial difficulties.
- Contract Bond – guarantees that an entity awarded a contract will meet its obligations under that contract. Bid bonds, Performance bonds, payment bonds, maintenance bonds and supply bonds are included in this category.
- Commercial Surety Bonds – guarantee a variety of business obligations which require surety bonds. Commercial Surety Bonds include all non-contract surety bonds, including all the various types of license and permit, miscellaneous and court bonds.
- Court Bonds – guarantee an individual will comply with the terms of the court. This includes probate and fiduciary bonds, and immigration bonds.
- License & Permit Bonds – guarantee individuals granted a license or permit to operate a business or to exercise a privilege will meet the obligations under that license or permit.
- Subdivision Bonds – guarantee that developers will make certain “off site” or “public land” improvements are in accordance with State, County or local specifications
Phone Barragan Insurance Agency at (916) 984-9320 for questions or applications.