Why does one need a business bonding insurance? As a person running a business one needs a surety bond to ensure that you get a payment for utility bills or for state sales taxes. Sometimes as a contractor you would need to post a permit bond or a license to give guarantee for your work for getting licenses for your requirements with municipalities. Then there are attorneys who may have clients that are needed to post court bonds like administrators or executors bonds to ensure that their performance is ensured while giving assets in the estate situations. Sometimes notary publics are needed to post bonds in some states.
There are many types of business bonding elements. Let us know more about them.
License and Permit Bonds
License bonds ensure that the Principal would adhere to all the regulations and codes that are established by the Obligee. The Obligee is normally an entity belonging to the government like a state, town or a city. Permit bonds ensure that you have a privilege. These include a license for an electrician, plumber, general contractor, and a permit for driveway, a sign permit and sales tax too.
Sometimes electrical contractors are expected to post a bond as a part of their requirements for a license. The bond specifies that the contractor would follow the electrical codes that are normally found in a municipality, town or a city. It is imperative that the bond specifies all the requirements that should be understood before writing the bond. The agent would ask to get a copy of the law or the ordinance that specifies what is required. The Obligee should have his own copy of the bond.
All the documents that are given as a supportive documentation are entirely dependent on the type of obligation and the financial statements and other information.
Public Official Bond
A Public Official Bond ensures that appointed or elected officials would surely perform their duties. The amount of the bond is usually shown by ordinance or statute. There are several types of bonds and these include tax collectors, treasurers, peace officers, and judges, notaries, hunting and Fishing license agents.
It should be understood that all the public entities should have the Public officials bonded. Public official bonds are inclusive of understanding the duties needed of the official and the reputation of the official and also the experience. These bonds are needed by the statutes or courts of the deceased persons and also minors who are set up and also administered. There are many types of public official bonds and these include the administrator, guardian, executor, conservator, trustee etc.
Bankruptcy or Equity Bond
This is a bond that requires a fiduciary to be appointed. This fiduciary is responsible for the sale of real estate or for property in the reorganization or foreclosure or litigation. This is a bond that has a perfect accounting and also enhances the performance of duties while distributing the assets and also managing them. There are many types of such bonds and these include the Trustees and the Receivers.
There are other judicial bonds that are required by a court in cases where there is someone taking legal relief or benefit. It is needed that that there is a specific supplemental information given. Types of such bonds include injunction, appeal, and attachment of bonds and release of lien.
There are also miscellaneous surety bonds that are inclusive of those who do not fit into any of the other categories of surety bonds. These are normally more hazardous and dangerous obligations. These types are inclusive of utility payment guarantee, union wage and welfare and lost security and lost instruments which include the stock certificates, cashier’s check and also municipal bonds besides of course bonds for union wage and welfare.
Then there are bonds which need more underwriting, as the guarantee to the obligee is mainly financial based. Apart from this there are other supportive information like financial statements, signatures, and many other supplemental forms that are normally required.
It normally covers all the employees and new employees are automatically covered. The employees are usually bonded for the same amount and there is a limit of liability that applies for each occurrence as mentioned in the policy. The premiums are mainly based on the total amount of the coverage requested and the total number of all the employees.
Thus business bonding insurances are very important and form an integral part of the business structure.