Surety Bonds Montana
They are insurance policies that are intended to protect clients from contractors or commercial salespeople who fail to fulfill their obligations to them. A Montana surety bond is essentially a contract between three parties: a principal, an obligee, and a surety. The principal is the individual or business who is supposed to provide a service to a client, the obligee is the client, and the surety is the party who sells the bond. Even though a bond is intended to protect the obligee, it is the principal who is responsible for purchasing the bond.
They are often required of contractors and professionals in industries such as auto sales and real estate for licensing purposes. The requirements for who needs to acquire a bond varies from one state to the next, so you will need to speak to an insurance professional to know the laws regarding Montana surety bonds. Let NFP Surety show you how to get bonded in Montana today!
How Does a Bonds Work?
There are different types of Montana bonds for different industries and scenarios, but most of them work in roughly the same way. As we said before, a surety works as insurance to an obligee even though it is the principal who is required to purchase the bond. An obligee is a client of the principal, which means the principal has an obligation to provide a service to the obligee (client). If the principal fails to provide that service, the client can file a claim against the bond. Should the claim be found to be valid, the surety – the insurance company who sold the bond in the first place – will reimburse the client according to the terms of the bond. It is then up to the principal to reimburse the underwriters of the bond for what was paid to the obligee.
Who Is Required to Purchase Bonds?
Most sureties are written for contractors in the construction industry, especially for government projects and any projects that will cost over $100,000 to complete. Commercial bonds may also be required of professionals who sell new and used automobiles. These bonds are required for licensing purposes and are generally required for anyone selling more than one or two vehicles. In other words, someone selling one used vehicle won’t need to purchase a surety, but someone who owns a used car lot and who acquires vehicles for the sole purpose of selling them will need a bond for licensing purposes. Sureties may also be required for government officials who work closely with the general public, real estate professionals, and legal professionals who might provide a court-supervised trust. Our staff can help you find the Montana surety bonds that you will need for your business. We’d appreciate the opportunity to show you how to get bonded in Montana.
What are the Different Types of Bonds
Even though there are different types of bonds available, most of them can be categorized as either contract bonds or commercial bonds. Contract bonds are required of contractors in the construction industry, either for government and public works projects or any construction project with a price tag of over $100,000. These bonds can themselves be placed into one of three categories:
- Bid bonds – A bid bond provides financial protection to an obligee if a successful bidder backs out of a project after committing to it and receiving payment. It basically allows the obligee to receive compensation for services that were promised yet never rendered. It also provides protection to the obligee if the principal provides no other form of security or insurance.
- Performance – A performance bond guarantees that all obligations will be met faithfully and to the satisfaction of the client.
- Payment – A payment bond guarantees that a principal will pay any subcontractors, suppliers and anybody else who is involved in a construction project.
While contract sureties are required for contractors for construction projects, commercial sureties are needed by individuals or businesses who provide other services. This is a wider category than contract sureties, but most can still fit into one of the following categories:
- License & Permit – A license and permit bond is a bond that is required for licensing purposes. It is a must for businesses in the automobile sales and real estate industries, among others.
- Court – Court bonds can be purchased by the plaintiff or defendant in a court case to preserve the rights of the opposing party.
- Fiduciary Sureties – A fiduciary bond is reserved for anyone providing court-supervised trust.
- Public Official – Public official bonds are required of certain public officials. They provide protection to the public should an official fail to perform his or her duties faithfully.
- Miscellaneous Sureties – These are commercial bonds that don’t fit into any of the above categories.
Because the laws and requirements for bonds can be complicated, you should always work closely with an insurance company to make sure that you obtain the bonds that suit your needs. If you have any questions about the type of Montana surety bond that you will need, don’t hesitate to contact our office today. Surety Bond Montana experts, and have been so, since 1984!
How to get bonded in Montana?
NFP Surety provides affordable Montana surety bonds and fidelity bond insurance.
If you are ready to get bonded in Montana, or have any questions about surety bonds Montana, please call us today. Our easy going bonding process will put your mind at ease. Apply for your Montana 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 agency for processing. Please allow us to show you how to get bonded in Montana, TODAY!
Quotes are free!
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