Surety Bonds

Bonds offer a financial performance guarantee provided by a surety company. There are numerous types of bonds required and available including:
  • Construction and  contract (bid and performance)
  • License and permit
  • Fidelity (employee dishonesty)
  • Financial institution
  • Court fiduciary
  • Public official
  • Court bonds (judicial and probate)
  • Notary public
  • Reclamation
  • Surety

We have several markets and expertise in providing bonding products.

A brief synopsis of the more common bonds follows below.  If you have questions, or would like additional information regarding your bonding needs, please contact  Angie Hawkins at 423.926.7151 or email angieh@widenerins.com.

Contract Bonds
A type of bond designed to guarantee the performance of obligations under a contract. These bonds guarantee the obligee that the principal will perform according to the terms of a written contract. Construction contracts constitute most of these bonds. Contract bonds protect a project owner by guaranteeing a contractor’s performance and payment for labor and materials. Because the contractor must meet the surety company’s pre-qualification standards, construction lenders are also indirectly assured that the project will proceed in accordance with the terms of the contract.

Bid Bonds
Bonds which guarantee that a contractor will enter into a contract at the amount bid and post the appropriate performance bonds. These bonds are used by owners to pre-qualify contractors submitting proposals on contracts. These bonds provide financial assurance that the bid has been submitted in good faith and that the contractor will enter into a contract at the price bid.

Payment Bonds
Payment bonds guarantee payment of the contractor’s obligation under the contract for subcontractors, laborers, and materials suppliers associated with the project. Since liens may not be placed on public jobs, the payment bond may be the only protection for those supplying labor or materials to a public job.

Performance Bonds
Performance bonds guarantee performance of the terms of a contract. These bonds frequently incorporate payment bond (labor and materials) and maintenance bond liability. This protects the owner from financial loss should the contractor fail to perform the contract in accordance with its terms and conditions.

Supply Bonds
Bonds which guarantee performance of a contract to furnish supplies or materials. In the event of a default by the supplier, the surety indemnifies the purchaser of the supplies against the resulting loss.

Maintenance Bonds
Bonds that provide for the upkeep of the project for a specified period of time after the project is completed. These bonds guarantee against defective workmanship or materials. These bonds may occasionally include a guarantee of “efficient or successful operation” or other obligations.

Blanket Fidelity Bonds
Bonds which guarantee the honesty of all of the employees of an entity to the stated amount of the bond. regardless of the number of employees involved in the loss. In other words, this type of bond covers all employees to the amount stated on the bond.

Court Bonds
A general term referring to bonds required in some action of law.

Employee Retirement Income Security Act (ERISA) Bonds
The 1974 act that created a requirement for a bond to be posted, in the amount of ten percent of the funds, on the fiduciary of pension funds and profit-sharing plans.

Fiduciary Bonds
Bonds which guarantee an honest accounting and faithful performance of duties by administrators, trustees, guardians, executors, and other fiduciaries. Fiduciary bonds, in some cases referred to as probate bonds, are required by statutes, courts, or legal documents for the protection of those on whose behalf a fiduciary acts. They are needed under a variety of circumstances, including the administration of an estate and the management of affairs of a trust or a ward.

License and Permit Bonds
A term used to refer to bonds, which are required to obtain a license or a permit in any city, county, or state. These bonds guarantee whatever the underlying statute, state law, municipal ordinance, or regulation requires. They may be required for a number of reasons, for example the payment of certain taxes and fees and providing consumer protection as a condition to granting licenses related to selling real estate or motor vehicles and contracting services.

Notary Public Bonds
Include bonds that are required by statutes to protect against losses resulting from the improper actions of notaries. Errors & Omissions coverage may be purchased with these bonds for a small additional premium.

Public Official Bonds
A type of bond that guarantees a public official will act with honesty and/or faithful performance. These bonds are required by statutes and ordinances.

Blanket Public Official Bond
Blanket public official bonds cover all public employees of the public entity stated on the bond to the stated amount of the bond.

Reclamation Bonds
A bond which guarantees that an institution will restore land, that it has mined or otherwise altered, to its original condition.

Surety Bonds
Surety bonds are three-party agreements in which the issuer of the bond (the surety) joins with the second party (the principal) in guaranteeing to a third party (the obligee) the fulfillment of an obligation on the part of the principal. An obligee is the party (person, corporation or government agency) to whom a bond is given. The obligee is also the party protected by the bond against loss.