What does it mean to be bonded to an employer?
A “bonded” employee is covered by a fidelity bond. These bonds are insurance policies designed to protect against the risk that an employee will intentionally steal from or damage the property of his employer or one of the employer’s clients. A bonded employee is one for which the employer has taken out such a policy.
When can you release a performance bond?
Generally, as a rule, a performance bond remains in force until the stated discharge date which is usually either after practical completion of the works or after making good any defects.
How do I buy a performance bond?
In order to get a performance bond, contractors must usually pay a premium on the bond amount as well as interest on the bond. Again, the price will depend on the cost of the bond and the risk (creditworthiness) the principal presents. In most cases, you will first need to obtain a bid bond before bidding on a project.
When would you use a performance bond?
Usually, performance bonds are provided in the real estate industry. These bonds are heavily used in real property construction and development. They protect real property owners and investors from low-quality work that may be caused by unfortunate events, such as bankruptcy or insolvency of the contractor.
What happens when a performance bond is called?
A performance bond provides assurance that the obligee will be protected if the principal fails to perform the bonded contract. If the obligee declares the principal in default and terminates the contract, it can call on the surety to meet the surety’s obligations under the bond.
What is the difference between a performance bond and a payment bond?
The Performance Bond secures the contractor’s promise to perform the contract in accordance with its terms and conditions, at the agreed upon price, and within the time allowed. The Payment Bond protects certain laborers, material suppliers and subcontractors against nonpayment.
What is the difference between a surety bond and a performance bond?
Performance bonds and surety bonds are the same type of instrument, used to help define business contracts when an owner wants to hire a contractor to do specific work. In general, “surety bond” is a term used to describe all such bonds, while “performance bond” is used to describe a specific type of surety bond.
What type of surety bond do I need?
There are two main categories of surety bond: Contract Bonds and Commercial Bonds. Contract bonds guarantee a specific contract. Examples include Performance Bonds, Bid Bonds, Supply bonds, Maintenance Bonds and Subdivision Bonds. Commercial Bonds guarantee per the terms of the bond form.