What is a Surety Bond in Maine?
A surety bond is a type of insurance that guarantees that an individual or business will hold up their end of a bargain when they are hired to provide a service to a client. It is basically a contract between three parties: a principal, an obligee, and a surety. The principal is the party who is hired to provide a service such as construction or the sale of an automobile, the obligee is the client of the principal and the one that the surety bond is intended to protect, and the surety is the underwriter who sells the bond to the principal. Should the principal fail to fulfill their obligations to the obligee, the obligee can file a claim against the bond and be financially reimbursed by the surety. This means that even though the principal is the party who is expected to purchase the bond, the bond itself is intended to protect the obligee from wrongdoing.
Surety bonds Maine are required in industries such as construction, real estate, and automobile sales. They are often required as part of the licensing process for professionals in these businesses, but the actual requirements may vary from one state to the next. We will be happy to work with you to determine which Maine surety bonds you will need for your own business.
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How do bonding solutions work?
There are many different types of Maine surety bonds available, but most of them work in roughly the same way. As we said before, a bond acts as insurance to an obligee, even though it is the principal who is required to purchase the bond. The principal has an obligation that they must fulfill to the obligee, whether that is the satisfactory completion of a construction project, selling a home or used vehicle, or even providing a service to the general public. If the principal fails to fulfill this obligation, the obligee can file a claim against the principal’s bond. If this claim is found to be valid, the surety who sold the bond in the first place reimburses the obligee according to the terms of the bond. It is then up to the principal to reimburse the surety for what was paid out to the obligee.
Who is Required to Purchase Maine Surety Bonds?
Most Maine surety bonds are written for the construction industry, especially for any government or public works projects. They are also requiredfor any construction project that carries a price tag of $100,000 or more. Meanwhile, commercial bonds are required of professionals in industries such as automobile sales and real estate, often for licensing purposes. These sureties are usually required of larger businesses who are selling multiple vehicles or homes. They generally aren’t required of individuals who are selling one vehicle on their own.
Surety Bonds Maine
What are the Different Types of Surety Bonds?
As we said before, there are several different types of bonds available in the state of Maine, but most of them can be categorized as either contract surety bonds or commercial surety bonds. Contract bonds are sold to contractors in the construction industry, and they are required by law for government construction projects. Contract bonds can themselves be organized into one of three categories:
- Bid Bonds – Most contractors win government projects by successfully bidding on them. Once they do win with their bid and accept payment, they are obligated to follow through with the project. A bid bond protects the obligee in the event that the principal fails to fulfill this obligation or if the principal fails to provide their own insurance or protection.
- Performance Bonds – A performance bond is in place to guarantee that all obligations will be faithfully met by the principal. This means that the principal doesn’t just perform their duties, but they do so in a satisfactory way.
- Payment Bonds – Most construction projects that are large or complicated enough to require a bond will require at least a few subcontractors, suppliers, and anyone else not normally a part of the principal’s usual business. A payment bond ensures that these people are all paid for their work.
While contract bonds are required of those in the construction industry, commercial surety bonds are required of individuals or businesses providing other services. Commercial surety bonds include:
- License and Permit Bonds – License and permit bonds are surety bonds that are required of businesses for licensing purposes. They are often needed for industries such as automobile sales and real estate, and a principal must obtain one if they are to legally do business in the state of Maine.
- Court Bonds – Court bonds are required during court cases. They can be purchased either by the defendant or the plaintiff to ensure that the rights of the opposing party are preserved.
- Fiduciary Bonds – A fiduciary bond is needed by a professional who is providing a court-supervised trust.
- Public Official Bonds – As their name implies, public official bonds are purchased by certain public officials. They protect the public should an official fail to fulfill their obligations faithfully.
- Miscellaneous Bonds – These are bonds that don’t fall into any of the above category.
How Do Bonds Benefit Principals?
At first glance, it may seem like a sureties only benefits an obligee. After all, it is the obligee that the bond is supposed to protect. However, sureties can benefit principals as well. First of all, they are necessary for licensing purposes if you work in certain industries. In other words, you need them in order to stay in business. They can also allow you to build some credit for your business, especially if you are new to a particular industry. Finally, purchasing sureties even if you don’t need one represents a show of good faith. It is a guarantee that no real financial harm will come to any of your clients, which goes a long way when it comes to interacting with consumers.
How to get bonded in Maine?
For more information about Maine surety bonds or to find the bond that is right for you, contact us (NFP Surety) today.
NFP Surety provides affordable Maine surety bonds and fidelity bond insurance. Every ME bond is prepared on a specific ME bond form, as prescribed by the entity requiring the bonding (known as the Obligee). Below is a list of surety bond Maine types that are commonly requested.
Apply for your surety bond Maine…now by completing our online application.
If you prefer, you may download an application to complete and fax or email to our bond agency for processing.
Quotes are free! Contact our iffice to learn how to get bonded in Maine. We’re happy to help.
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