What is a Florida Surety Bond?
Bonding is an insurance policy that guarantees that a principal – the party that requires the bond – meets all of their obligations to an obligee, or the party that the bond protects. The surety – the party that sells the bond to the principal – financially reimburses the obligee should the principal fail to fulfill their obligations. Bonds are required for construction and renovation projects in excess of $100,000 and any project involving a federal building or public works project. They are also often required of automobile dealers and any professional requiring licensing from the federal, state, or municipal government. Each state also has its own requirements when it comes to bonding, so laws involving Florida surety bonds may be slightly different from requirements in other states.
Surety Bonds Florida
How do Florida Surety Bonds Work?
Sureties in are admittedly difficult to understand, especially since there are a few different kinds of Florida surety bonds. To put it as simply as possible, a surety is a contract that is put in place to protect the government and its citizens from an individual or business who might try to cheat them out of a service that they owe. For example, a contractor who is completing a construction project for a federal building would have to purchase a bond to ensure that they complete the project to the client’s satisfaction. If the project is not completed, the client – who in this case would be the federal government – could file a claim with the surety who sold the bond to the contractor. The client would then be financially compensated according to the terms of the bond. The underwriters of the bond would then expect the contractor to reimburse them for the claim that was paid.
Common Types of Florida Surety Bonds
There are several different types of bonds available, and it is up to the principal to determine which one they need. Most of these bonds can be categorized as either contract bonds or commercial bonds.
Contract bonds are any bonds that may require a contractor to obtain. They are generally required for construction projects, especially those for government and public works projects. The three types of contract sureties are:
- Bid bonds – These provide protection to a project owner when a successful bidder fails to enter the contract or provide a bond of their own.
- Performance – A performance bond provides protection to a project owner should the contractor fail to complete a project or otherwise fulfill their obligations.
- Payment – A payment bond guarantees that a contractor pays for all the subcontractors and suppliers that were necessary for a particular project.
Meanwhile, commercial sureties are required of individuals or businesses as opposed to contractors. The most common types of commercial sureties include:
- License and permit bonds – License & permit sureties are required by state, municipal, or federal law as a condition for doing business in certain industries. For example, many states require a license and permit bond to sell a certain number of used vehicles to consumers.
- Court bonds – Court bonds are required of plaintiffs or defendants during court cases. They are intended to protect the rights of the opposing litigants and any other interested parties.
- Fiduciary – These are required for trusts administered under court supervision.
- Public official bonds – Public official bonds are required of certain holders of public office. They are put in place to protect the public should the official fail to fulfill their duties faithfully.
- Miscellaneous – These are commercial sureties that don’t fall into any other category.
How to get Bonded in Florida
If the law requires you to have a surety render your services, it is up to you to obtain one. Fortunately, there are insurance agencies available that can get your bonded in Florida. There are thousands of different bond requirements, so you will most likely have to do some research before you shop around for the bond that is right for you. Once you have an idea of what you need, our agency will be glad to help you make the final decision and sell you the appropriate bond at an affordable price.
How a Surety Bond Helps You
At a glance, it might seem that a surety only benefits your clients or the government, but purchasing one will help you as a business owner or contractor. Buying a surety provides you with surety credit and lets your client know that your services will be legitimate. Working without a surety solution may require you to put up some of your assets as collateral, which will lower your liquid assets and leave you without any legal protection should a claim be filed against you. Even though purchasing a surety is required by law in many cases, it is still in your best interest to have one even when it is not.
Apply for your Florida surety bond now by completing our online application.
If you prefer, you may download an application to complete and fax or email to our bond insurance agency for processing.
Same day service for most bonds. Quotes are free! Get all your information about surety bonds Florida by calling or contacting our offfice. We love to answer bonding related questions. Ask us, “how to get bonded in Florida”…we have the answer. Regardless of credit status.
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