A surety bond is an agreement between three parties whereby one parties guarantees that another will perform certain work it is contracted to do. It is a promise to provide credit , if and when needed, to ensure performance of a contract.
- Bid bond is a guarantee by the surety company that the contactor's bid is bona fide. The Bid Bond accompanies a tender and guarantees the owner that if the contractor is awarded the contract, the contractor will honour the bid, sign a contract to do the work and provide any further bonding that’s required to fulfill the contract.
- Consent of Surety (Surety Letter). A tender often calls for a Consent of Surety or a Letter of Surety to accompany the bid bond. The Consent of Surety guarantees that the bonding company will provide the specified bonds to secure the contract if the contractor is the successful bidder.
- Labour and Material Payment Bond guarantees to the owner that the contractor will pay for labour and materials used in executing the contract.
- Performance Bonds guarantees performance of the contracted work, up to the face value of the bond. If the contractor defaults on his obligations, the owner will look to the surety for completion of the project.
Commercial surety bonds
- Licence and Miscellaneous Surety Bonds. Government regulatory authorities and some businesses require that a bond be posted before they will grant permission, usually in the form of a license, to engage in the activities they regulate. The intent is that the applicant will honour his commitments rather than risk personal monetary loss by forfeiting the money represented by the bond.
- Administration or Fiduciary Bonds are required when the court appoints an administrator to administer the estate when an individual dies without leaving a will. The court may claim under the bond if the estate is not administered according to law.
- Lost-Securities Bonds enable a person to secure duplicates of valuable documents that have been mislaid, stolen, or destroyed by such causes as fire, by presenting this bond to the life insurance company, bank or industrial concern who originally issued the lost document.
- Service Bonds cover situations where a business owner (Principal) is required to provide a bond to a 3rd party (Obligee) guaranteeing performance of services without loss to that 3rd party through dishonest or criminal acts committed by the Principal or employees.
- Blanket Position Bonds cover all employees effective the day the bond is issued. Employee means any person or officer in the regular employ of the insured who receives salary, wages, or commission, and whom the insured has a right to govern and direct at all times in the performance of their employment. As the bond automatically includes new employees and ceases on employees who no longer are employed, it is not necessary to endorse deletions or additions.
There are 2 types of blanket fidelity bonds
- Blanket Position Bond – provides a specified limit on each employee. Bond may be extended to provide excess of the specified limit on specified employees.
- Commercial Blanket Bond – provides one aggregate limit of liability, regardless of the number of employees involved.
- Named-Scheduled Fidelity Bonds. This bond provides coverage on employees named on the bond. Bond lists the name and position of each employee and the amount for which each is bonded
For more information or to request a quote, call us at 416-667-9177 or email us at moc.esnifnac@sdnob.