Frequently Asked Questions About Bonds
What is a Surety Bond?
A surety bond is a written agreement whereby one party called the surety (insurance company), obligates itself to a second party, called the Obligee (who the bond is in favor of ) to answer for the default of a third party called the Principal (whoever applies for and receives the bond).
What is a Surety Company?
A Surety Company is a corporation licensed under various insurance laws, which under its charter has legal power to act as Surety for others.
What is a License and/or Permit Bond?
Bonds that are required by State law, municipal ordinance or regulation, to be filed prior to granting of a license to engage in a particular business or a permit to exercise a particular privilege.
What is an Instant Issue Surety Bond?
Many of our surety bonds are "Instant Issue" these are identified by the words "Instant Issue" appearing above the bond type on the order screen. "Instant Issue" means that there is no underwriting and the surety bond is issued subject only to a completed on-line application and confirmation of premium payment. When we receive confirmation of both your bond will generally be processed and sent to you the same day via U.S. Mail. MassBond.com also offers a 2 day express mail and Federal Express Options. What could be easier ?.
MassBond.com also offers bonds that are not Instant Issue Surety Bonds, some require underwriting. Our carriers strive to respond and quote all requests within 48 hours of receipt of a complete application.
What is the "Lowest Price Bond Guarantee" and how does it work?
We guarantee that the Instant Issue bonds purchased through MassBond.com are at the lowest price that the coverage can be obtained for. How do we do this ?, before pricing a product we research the market, the product is then priced accordingly by our carriers. All prices are of course subject to rates filed by our carriers. If you should happen to find a bond for less after you purchase from MassBond.com we will refund you the difference. Our lowest price guarantee is subject to the following:
Is it difficult for an Individual to get approved a license and/or permit bond?
- Lowest Price Guarantee is for Instant Issue Bonds only, these products are clearly identified.
- The lower priced bond must provide identical coverage in amount and term of coverage, indemnity and application.
- The lower priced bond must have been available when you secured your coverage through MassBond.com
- The lower priced bond must be available over the Internet.
- You must submit your claim via certified U.S. mail to our home office with evidence and pricing of the lower priced bond within 6 months of the original issue date of the MassBond.com issuance.
No not really, generally most of these types of bonds are issued freely. However some types of bonds do require a review, called underwriting.
Is it difficult for a Contractor to get Bonded?
The review process for Contractors involves a thorough analysis of the contractors character and capabilities. Analysis would include references checks on previous projects, credit history and experience, etc. Most contractors will qualify for the bonding on work that they typically perform.
What does it take to get approved for bonding by a Surety Company?
It depends on the size of the project and the frequency that you will require bonds. MassBond offers a simple on line application for bonds of $50,000 or less. If you want to get your company set up to bid frequently the Surety would require more information such as financial statements, work on hand schedules, accounts receivable and payable scheduled and a questionnaire. More of less paperwork would be required based on your anticipated needs. All of the company's we work with make obtaining surety support easy and uncomplicated.
What is a Bid Bond and when is it required?
A bid bond is issued by the Surety Company to the owner of a project. The bid bond is subject to full or partial forfeiture if the low bidder fails to enter into the contract and provide the required Performance and Payment bonds. All Public and some private jobs require a bid bond or cashiers check to be submitted with a bid at the time the bid is submitted.
How much do bid bonds cost ?
Some Surety companies provide bid bonds at no cost to established clients. Some charge an annual bid bond Service Undertaking Fee ranging from $250-$500. This fee covers for bid bonds provided usually within a 12 month time period. Other Surety companies may charge a fee for each bid bond.
What is a Performance and Payment Bond?
A performance bond is issued by a Surety Company to the owner of a project guaranteeing that the project will be completed within its set terms and conditions. The Payment bond guarantees that all subcontractors, labor and material suppliers will be paid.
What do Bid Bonds and Performance and Payment Bonds Cost?
Premium rates vary and are based on the contract amount, type of work, etc. Rates typically range form under 1% of the contract amount to 3% of the total contract amount.
My company is new can I still get bonded?
Of course. There are a variety of programs to support new and emerging businesses . Call us 1-800-829-2663x108 or send us an email today !