Here are some common types of surety bonds:
Contract surety bonds
- Bid bonds.
- Performance bonds.
- Payment bonds.
Commercial surety bonds
- License bonds.
- Permit bonds.
- Judicial bonds.
- Fiduciary bonds.
- Public official bonds.
- Notary bonds.
- Miscellaneous bonds.
Benefits of surety bonds
Surety bonds are a way of ensuring that your interests are protected, whether as part of a construction contract or as part of official duties as a notary. The bond is similar to insurance in that if something goes wrong, it can be activated to help cover damages. Unlike insurance, the expenses that those surety bonds cover ultimately fall back on the shoulders of the principal.
In the case of most surety bonds, the person holding the bond -- known as the principal -- is the person who needs protecting. Going back to the notary, for example, if they were to notarize something and make a mistake that resulted in damages to another party, their bond would help shield them from financial harm. In the case of a building contractor who has to get a surety bond for a government job, the surety bond protects them in case something happens to make completing the job impossible, but it also protects the government entity in that it will pay for what hasn't been finished.