Surety Bond Categories
Coming Soon!
Additional Lessons
- Lesson 1: What Are Surety Bonds?
- Lesson 2: Surety Bond Categories
- Lesson 3: The Contract Bond Process
- Lesson 4: The Commercial Bond Process
- Lesson 5: SBA Bond Program
Lesson 2 Class Notes: Surety Bond Categories
Hello, and welcome to Surety Bonds 101! Today we are covering Lesson 2, "Surety Bond Categories". I am your instructor, Professor Bond. Let's get started.
There are literally thousands of different surety bond requirements for various occupations. All of them are considered to be a certain bond type labeled by the surety industry...and for each bond type, there is a surety bond category that it falls under.
Today we will be talking about the two main surety bond categories and provide some examples of surety bond types that fall under each category.
Contract Bonds
Let's begin by looking at contract bonds. Any bond type that guarantees a specific contract falls under this category. The most well known contract bonds are bid bonds & performance bonds. However, there are several other less known contract bonds as well including: payment bonds, maintenance bonds, & subdivision bonds.
Commercial Bonds
Commercial bonds are also known as non-contract bonds, as they are not guaranteeing a specific contract. They have several bond sub-categories with numerous bond types that fall under each.
For instance, there are license & permit bonds, which are a bond types required by state and or local regulations in order to obtain a license or permit to legally operate in a particular business. There are countless license bond types, such as mvd bonds, contractor license bonds, and mortgage broker bonds just to name a few.
Court Bonds
Another commercial bond sub-category are judicial bonds, also known as court bonds. Court bonds guarantee an appointed fiduciary will comply per a court order. Some court bond types are appeal bonds, guardianship bonds, and probate bonds.
There are so many commercial bond types available that a miscellaneous sub-category had to be created. These are bonds that do not guarantee a contract or license regulations, such as utility bonds, union bonds, other financial guarantees, and any other commercial bond types that doesn't fit into the other sub-categories.
So let's do a quick review!
- There are thousands of bond types available
- Each surety bond type falls under 1 of 2 surety bond categories
- Contract bonds
- Commercial bonds
- A bond type is defined by what it guarantees
That will be all for Lesson 2. Please visit me in the Surety Bond Forums if you have any questions!
