Surety bonds are entered into by three parties: the obligee (whoever is requesting the bond, i.e., a customer), a principal (the party expected to fulfill obligations, i.e., the business owner), and the surety (the insurance company issuing the bond).There are many different types of surety bonds, and they’re used for a variety of reasons. Whether you’re the obligee or a principal, there are several important things to understand about surety bonds. We put together a list of frequently asked questions to highlight important issues surrounding these bonds.
When is a surety bond required in Salt Lake City?
Many states require surety bonds in certain situations, and in Utah, there are three types of surety bonds that can be legally required.
- Contract bonds
- License bonds
- Court bonds
If you’d like to bid on a project as a contractor, a contract bond is required to declare you will uphold your end of contractual obligations, including the time it takes to complete a project.
Court bonds aren’t as common as other types of surety bonds, but there are a few instances where they’re required. If you’re guarding another person’s assets or are appealing a court ruling, you may need a court bond.While these are the three types of surety bonds that may be required in Utah, there are several other types of bonds that aren’t always required but are often useful.
What kinds of surety bonds exist?
Underneath the umbrella of contract bonds, license bonds, and court bonds fall many other types of surety bonds. These include collection agency bonds, cigarette tax bonds, lottery bonds, fuel tax bonds, and more.
Understanding surety bonds can be challenging, which is why the experts at Salt Lake City Insurance are here to help you determine what kind of bond you need for your business.