Surety Bonds in Los Angeles
Most of the insurance packages we offer protect your business, but surety bonds are designed to protect your community. Even if you are not intending any harm, a surety bond will be needed in certain stages of business growth.
Surety bonds are a form of credit agreement that requires three parties, instead of regular two party insurance agreements. These parties are:
- The principle
- The obligee
- The bonding company (also called, carrier)
Surety bonds are a financial backup for the obligee to allow the principle perform the agreed operations. These bonds are less expensive than credit and are preferred by companies. Moreover, bonding companies usually provide support, while banks don’t offer this benefit to creditors. Based on the operations you’re looking to perform, you’ll need a specific type of surety bonds. That’s what our team can help you with.
When do you need a surety bond?
Surety bonds can be an essential requirement for starting a business. For instance, if you are an auto dealership company looking to do business in Los Angeles, here’s how the process will work for you. The state of California (obligee) needs surety bonds from a bonding company (carrier). The aim of this guarantee is to make sure that you (the principle) will carry out the responsibilities.
Likewise, if you need to hire a contractor, you can ask for surety bonds. This way you are financially guaranteed that the contractor will carry out the contract as you both signed. In case of failure, the bonding company will compensate you for the loss or damage. The bonding company pays all costs, including legal fees.
Types of Surety Bonds
Since the types of surety bonds vary so widely, the cost to obtain them does as well. The following list indicates the main types of surety bonds that are commonly obtained.
- Public official – required to guarantee that an appointed or elected official will complete assigned duties properly.
- Probate and court– required by courts to ensure the proper performance of duties by a trustee or fiduciary as related to the settlement of an estate or the sale of real estate, including properties in foreclosure.
- Contract performance – used to guarantee the full compliance of the terms and conditions presented in a contract.
- License and permit – needed to guarantee that the principal party complies with all regulations and codes set up by the local, city, or state government.
- Miscellaneous – encompasses all other categories of surety bonds that have not already been accounted for, including but not limited to union wages, utility payments, and lost securities.