Surety Bond Illinois
Bonding has become an essential part of business practices today. They are useful because they offer protection to customers against the services of negligent service providers while extending a level of credit to companies/persons that offer services on a daily basis. The usefulness of Illinois surety bonds makes them a regularly utilized legal document.
With a surety bond Illinois, customers can seek the services of a business knowing that they will be compensated in case the contract is violated. A growing number of businesses are therefore required to be bonded so as to protect their customers from damages incurred when the terms of a contract are not fulfilled.
Before diving into the world of sureties transactions, it is important to understand what bonds are, how they work, and the various types of bonds that are issued.
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What is an Illinois Surety bond?
A bond is a contract that is signed between 3 parties; the principal, the obligee, and the surety. A Principal is the person/business that is offering the service and is required to issue a bond as a guarantee for their services. The obligee is the recipient of the services from the principal. When an obligee seeks a particular service from the engaged principal, the obligee will request bonding to be issued to them as part of the contract agreement. Why is the bond important? The obligee can make a claim on the bond in the event that the principal does not hold up their end of the bargain and does not fulfill the terms of the contract.
For example, when a person/business (the obligee) seeks the services of a construction company (principal), the obligee will typically want to make sure that they are protected from damages they can incur as a result of negligence on the part of the principal. The construction company can sometimes fail to carry out the project up to required standards, or it can fail to pay subcontractors during the project.
In such cases, the losses and debt incurred can become the burden of the project owner (the obligee), because subcontractors can choose to sue the obligee if the business does not honor their contract. Bonds issued by a principal ensures that the obligee can make a claim against the bond for any damages incurred.
When a principal requires a bond, they typically obtain it from an insurance company referred to as the surety. The surety extends a bond offer to the principal in exchange for monthly premiums. When an obligee makes a claim on a bond, the surety will honor the claim and later seek compensation from the involved principal. The bond holder and surety will, therefore, agree on the bond amount, premiums, and method of payment when a claim is made.
They are part credit, part insurance
An Illinois bond, therefore, serve two important roles. They are part credit to the involved principal, and part insurance to the obligee. When an obligee obtains the services of a bonded principal, they can enjoy an extra level of security to the services that they receive. If the bond holder violates the terms of the contract, the obligee can make a claim against the bond and be compensated for damages incurred.
On the other hand, IL bonds also act as an extension of credit to the principal. When a claim is made against the bond by an obligee, the bonded does not have to incur high out of pocket expenses. This is because the surety will typically honor the claim, and later seek compensation from the involved principal.
Types of Illinois Surety bonds
With the usefulness of sureties in business transactions, they have become commonly used in many different industries. The following are some of the most commonly issued sureties:
Appraisal Management Company Bond – Companies that carry out appraisals on real estate are required to post a $25,000 bond. The bond ensures that appraisal companies adhere to the rules and regulations that are set for valuing pieces of real estate. The bond also ensures that the appraisal company pays all taxes and fees to the Illinois Financial Department.
A claim can be made on the bond if the company does not pay all required fees, or does not properly carry out its appraisal duties.
Public adjuster surety bond – Public adjusters in Illinois are required to post a $20,000 bond to protect their clients. A public adjuster bond ensures that all public adjusters in the state conduct themselves to the required professional standards.
Public adjusters who commit fraud, don’t pay required fees, or fail to act responsibly may have a claim made against the bond.
Performance bonds – Performance bonds are issued to guarantee that a company will complete a project to the expectations of the obligee. The example given initially of a construction company designing a building for a real estate investor is an example of a performance bond.
By requiring a performance bond, the investor can have peace of mind that if the project is not completed to the specifications of the contract, they can get reimbursed for damages.
Illinois Certificate of Title Bond – Bonded title Illinois. Persons who purchase a vehicle without the original title are required to post a bond that is 1.5 times the value of the vehicle. The bond acts as an assurance that the owner will pay costs associated with a stolen vehicle, a fraudulent title, or any other forgery and theft costs associated with the vehicle. We can help you get a bonded title Illinois.
How to obtain an Illinois Surety bond
Bonds can be obtained by a person/business through submitting an application to a surety company. With bonds being commonly used and sometimes required in several industries, the process of applying and obtaining them has been made much easier. Applications can now be made online or over the phone. Call NFP Surety today, or simply fill out our free online application. It only takes a minute, and you could get bonded today.
When applying, you will need to submit information about you and your business, the bond that you need, and your financial information. The surety will use this information to determine the bond amount you qualify for as well as your monthly premiums. The surety may also need to conduct a credit check to further establish credit worthiness.
Working closely with a surety company can enable you to receive lower monthly premiums and identify the right type of bond for your needs. That’s what we do!
NFP Surety provides affordable bonds and fidelity bond insurance. Each bond is prepared on a specific bond form, as prescribed by the entity requiring the bonding (Obligee). If you have any questions about surety bond Illinois cost, give us a shout. We appreciate the opportunity to answer any questions you might have about how to get bonded in Illinois.
Apply for your Illinois sureties 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. Call us to learn more about surety bond Illinois. We can get you bonded today. Quotes are free!