3 Types of Bonds and Their Primary Purpose

There are three kinds of bonds – bail bond, surety bond and construction bond. Most people have heard of a bail bond, some have even heard of a surety bond, but the majority of folks have never heard of a construction bond. Curious what these are and what purpose they serve? Check out what each type is and how they work.

A Look At A Bail Bond

A surety bond company provides a bail bond via a bail bondsman or agent to secure a defendant’s release from jail. There are two kinds of bail bonds – civil bail bond or criminal bond.

  • Civil Bail Bond – This type of bond is offered in civil cases, guaranteeing debt payment, along with any costs or interests, the court places against a defendant.
  • Criminal Bond – This type of bond ensures a defendant will show up to court on the scheduled date and time, and provides payment for any monetary penalties assessed on a defendant.

The U.S. Constitution states bail cannot be more than a defendant’s ability to pay. A judge will consider four factors to determine whether or not bail is granted and the dollar amount.

Source: https://abetterbailbond.net/what-is-a-bail-bond

A Look At Construction Bonds

Investors involved with construction projects use a surety bond called a construction bond (or contractor license bond). This kind of bond provides a project owner with a guarantee that the contractor will fulfill the terms outlined in an agreement. In bigger projects, the construction bond may be separated into two parts – one for protection against a project not being completed and the other for protection from subcontractors not paying for materials.

 In essence, the bond is designed to ensure the bills of the project are paid.

Source: https://constructionexec.com/article/construction-bonds-explained

A Look At Surety Bonds

This kind of bond is the kind of insurance policy for the person needing it (typically a government agency) to mitigate losses for the entity and citizens. It’s a contract between three entities:

  • Surety company (writing the bond)
  • Principal (entity needing it)
  • Oblige (department that demands it)

The surety bond is a guarantee that outlines the terms between the principal and obligee. If the requirements of the bond are not met, a claim can be filed against it.

When it comes to bonds, there are many types out there. If you own a business, it’s essential to know what each type is and what type you need to succeed. Check us out on Facebook to learn more and how we can help you.

Source: https://www.suretybonds.com/surety-bond-definition.html