Commercial bonds essentially represent the broad range of bonds that do not fit under the classification of Contract Surety. They are generally divided into four subdivisions: Court Bonds; License and Permit Bonds; Public Official Bonds; and Miscellaneous Bonds.
For a description and some specific examples of the various types of Commercial Bonds, please read below.
Court bonds are bonds prescribed by a given State’s statute and relate to a function of the courts. They are further subdivided into Judicial Bonds and Fiduciary Bonds. Judicial bonds stem from some aspect of litigation and are posted by parties seeking court remedies or defending against legal actions that seek court remedies. Some examples of judicial bonds include attachment bonds, appeal bonds, supersedeas bonds, replevin bonds, injunction bonds, Mechanic’s Lien bonds, and bail bonds.
Also known as Probate Bonds, are used by probate or estate courts and guarantee that persons to whom such courts have entrusted the care of others’ property will perform their specified duties faithfully and within the requirements set by statute. Examples of such bonds are administrator bonds, guardian bonds, and trustee bonds.
License and Permit Bonds
License and permit bonds are required by federal, state or municipal governments as prerequisites to receiving a license or permit to engage in certain business activities. These bonds function as a guarantee from a Surety to a government entity that a business will comply with an underlying statute, ordinance or regulation. Examples are contractors license bonds, customs bonds, brokers bonds, ERISA bonds, money transmitter bonds, and prepaid services bonds.
Public Official and Miscellaneous Bonds
Public Official bonds guarantee the honesty and faithful performance of those people who are elected or appointed to positions in government. These bonds are usually required by statute for a variety of officials, including but not limited to notaries public, treasurers, commissioners, judges, town clerks, public administrators and law enforcement officers.
Miscellaneous bonds are those that often support private relationships or unique business needs and are not otherwise classified under the other Commercial Bonds subdivisions, such as lost securities bonds, lost title bonds, hazardous waste removal bonds and self-insured workers compensation bonds, to name a few examples.
A word about Fidelity Bonds. While broadly referred to as a bond, this type of coverage provides employee dishonesty coverage to reimburse an employer for the theft of money or property by its employees, or in some cases by third party associates such as janitorial or other types of service providers. The coverage actually functions as traditional insurance , rather than as a surety bond.