Surety bonds can be classified into various categories based on their purpose and the parties involved. The two primary classifications are contract bonds and commercial bonds.
Contract bonds are primarily used in the construction industry and ensure that contractors fulfill their contractual obligations. Within this category, there are different types of contract bonds, such as bid bonds, performance bonds, and payment bonds. Bid bonds provide financial security to project owners by guaranteeing that the contractor will enter into the contract if awarded. Performance bonds protect the project owner by ensuring that the contractor completes the project according to the terms and specifications. Payment bonds provide assurance that subcontractors and suppliers will be paid by the contractor for the work performed.
Contract bonds are also used outside the construction industry for service contractors and suppliers. Examples include bus services, lawn services, pest control, waste management services, janitorial services, security services, and more; performance bonds guarantee the performance of their services or supply of materials and equipment and the payment bonds guarantee payment to subcontractors or suppliers.
Commercial bonds, on the other hand, are not specific to the construction industry. These bonds are required by government agencies or regulatory bodies to protect the public interest. They include license and permit bonds, court bonds, public official bonds, and fidelity bonds. License and permit bonds ensure that businesses comply with regulations and fulfill their financial obligations. Court bonds are required in legal proceedings and guarantee the payment of damages in case of a judgment. Public official bonds safeguard against dishonest acts by public officials, while fidelity bonds protect against employee theft and fraud.
If you have any questions on Surety Bonds or would like a surety professional to help manage and advise your bond program, contact any surety specialist of the Parrot Surety team today!
Surety bonds can be classified into various categories based on their purpose and the parties involved. The two primary classifications are contract bonds and commercial bonds.
Contract bonds are primarily used in the construction industry and ensure that contractors fulfill their contractual obligations. Within this category, there are different types of contract bonds, such as bid bonds, performance bonds, and payment bonds. Bid bonds provide financial security to project owners by guaranteeing that the contractor will enter into the contract if awarded. Performance bonds protect the project owner by ensuring that the contractor completes the project according to the terms and specifications. Payment bonds provide assurance that subcontractors and suppliers will be paid by the contractor for the work performed.
Contract bonds are also used outside the construction industry for service contractors and suppliers. Examples include bus services, lawn services, pest control, waste management services, janitorial services, security services, and more; performance bonds guarantee the performance of their services or supply of materials and equipment and the payment bonds guarantee payment to subcontractors or suppliers.
Commercial bonds, on the other hand, are not specific to the construction industry. These bonds are required by government agencies or regulatory bodies to protect the public interest. They include license and permit bonds, court bonds, public official bonds, and fidelity bonds. License and permit bonds ensure that businesses comply with regulations and fulfill their financial obligations. Court bonds are required in legal proceedings and guarantee the payment of damages in case of a judgment. Public official bonds safeguard against dishonest acts by public officials, while fidelity bonds protect against employee theft and fraud.
If you have any questions on Surety Bonds or would like a surety professional to help manage and advise your bond program, contact any surety specialist of the Parrot Surety team today!
