Bond Insurance
Make a promise to guarantee the performance or obligations of the principal to the obligee, and cover yourself in the event of default or failure.
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Insurance Cleveland is currently licensed in the following States: Illinois, Ohio, Michigan, Pennsylvania
Bond Insurance That Fits Your Needs
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Surety bonds are a contract among at least three parties—the principal, the obligee and the surety. To benefit the obligee, the surety agrees to uphold the contractual promises made by the principal if the principal fails to uphold its promises to the obligee. These types of bonds are frequently used in the construction industry. In order to obtain a contract to build a project, the general contractor (and often the sub-contractors) must provide the owner of a bond for its performance of the terms of the contract. Surety bonds are also used to secure the proper performance of fiduciary duties by persons in positions of private or public trust.
Policy Highlights
- Bond insurance protects borrowers from default by guaranteeing repayment of principal and interest.
- Enhance your credit rating in order to reduce the amount of interest needed to pay.
- Make your bonds more attractive to potential investors.
Frequently Asked Questions
What are the different types of commercial surety bonds?
Common types of commercial surety bonds include:
- License and Permit Bonds: required when professionals apply for a license (plumbers, electricians, contractors, etc.)
- Mortgage Broker Bonds: ensures mortgage brokers adhere to state regulations
- Other types: specialized commercial surety bonds apply to liquor companies, utilities, warehouse companies, travel agents, lottery-ticket sellers, etc.
When do you need a surety bond?
Surety bonds are typically required for contractors who seek to work on government contracts. These bonds make sense when a contract requires performance, because they help compensate obligees when principals fail to meet their contractual obligations.
How much does a surety bond cost?
On average, the cost for a surety bond falls somewhere between 1% and 15% of the bond amount.
What factors impact the price of a bond?
Premiums are generally based on the following:
- Type of surety bond needed.
- Bond coverage amount required.
- Your credit history.
- Regulatory authority requiring the bond.
- The bond provider you work with.
- The state you’ll be operating in.
- Years of experience you have in the industry.
- Your claim history for previous bonds.
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