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All About Commercial Surety Bonds from caitlynwilliams's blog

Commercial surety bonds are required by the Federal, state or local government agencies in commercial transactions. The purpose of the bond is to safeguard the customers from fraud, misrepresentation or non-performance. It asks for financial assurance from businesses at various levels of the government. It provides financial protection to the parties in a commercial transactions.

The main types of commercial bonds are:

• Federal non-contract bonds – These are required by the federal government from professionals like Medicaid and Medicare providers, customs, immigrants and excise personnel.

• Public official bonds – These are required from public officials, such as treasurers, tax collectors, sheriffs, judges, court clerks and notaries. The bond guarantees that the official will discharge his/her duties as per the rules.

• Judicial bonds –
These commercial surety bonds are meant to secure the performance of fiduciaries’ duties and compliance with court orders. Judicial court bonds are typically required in injunctions, appeals, indemnity to sheriff, mechanic’s lien, attachments, replevin and admiralty.

• License and permit bonds –
These bonds are necessary for obtaining a license or permit to engage in a particular business or profession, such as contractors, motor vehicle dealers, security dealers, employment agencies etc.

• Subdivision bonds – These bonds guarantees that the principal will finance and carry out certain improvements to state properties, such as sidewalks, curbs and gutters.

Factors that decide a commercial surety bonds cost:

Type: Different types of bonds have different costs. A surety will take into account the bond you are buying before fixing a cost.


Risk: A bond is also a risk for the surety. So, the cost will take into account the risk posed by the bond.


Term: The total time-span covered by the bond.


Financial & professional history: This is often the most important factors in deciding the cost of a commercial surety bond. The surety will check your history of discharging similar duties as well as your financial stability when determining the cost of the bond.



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