Resources - NorCal Bonds - Surety & Contractor Bonds

Frequently Asked Questions:

Here, we've compiled answers to some frequently asked questions about Surety & Contractor Bonds and our services. If you don't find what you're looking for, please contact us.

What is a Surety Bond?

A Surety Bond is a three-party agreement where the surety (insurance company) guarantees the performance, obligation, or adherence to legal requirements of the principal (you) to the obligee (the entity requiring the bond). It's used to manage risk in transactions, ensuring obligations are met. Surety & Contractor Bonds are specifically designed for construction projects, ensuring that contractors fulfill their obligations to project owners.

What is a bail bond?

A bail bond is a type of surety bond that ensures the release of a defendant from jail, promising their appearance in court. It’s an agreement backed by a bail bond agency on behalf of the defendant.

How do I apply for a bond?

Applying for a bond with us is straightforward: Visit our online application portal. Fill out the required information about your business and the bond you need. Submit the application. We will review your application and get in touch with you for the next steps.

What Documents are Needed?

The documents required can vary, but generally include: Completed application form. Business financial statements for the last two years. Personal financial statement of the business owner(s). Copy of the contract requiring the bond (for contract surety bonds). Specific document requirements will be provided once your application is reviewed.

How Much Does a Surety Bond Cost?

The cost of a surety bond is determined by the bond amount, your credit score, and other factors related to the risk assessment. Generally, you can expect to pay a premium that's a percentage of the bond amount, typically ranging from 1% to 15%. For an exact quote, please use our online quoting tool or contact our office.

How Long Does It Take to Get a Surety Bond?

The issuance time for a surety bond can vary: Instant issue bonds for simple requirements can be processed within 24 hours. Standard bonds usually take 1-3 days after all necessary documents are received and approved. More complex bonds requiring extensive underwriting can take longer, up to a week or more. We strive to expedite every bond application while ensuring thorough due diligence.

Glossary:

Bail: The temporary release of an individual from jail, conditional upon their future appearance at court.

Surety Bond: A bond obtained through a bail bond agency, ensuring the defendant's appearance in court.

Indemnitor: A person who agrees to be financially responsible for the bond if the defendant fails to appear in court.

Forfeiture: Occurs when a defendant fails to appear in court, resulting in the bail bond amount being owed to the court.

Principal: The party in a surety bond agreement who is obligated to perform a duty or fulfill a contract for the obligee, often in contexts beyond bail, such as construction projects or license agreements.

Obligee: The entity that requires and receives the protection of the surety bond, ensuring the principal meets the bond's terms. Common obligees include government agencies, project owners, or courts.

Underwriter: The individual or company that assesses and accepts the risk of the surety bond, issuing the bond on behalf of the surety company, based on an evaluation of the principal's performance ability and financial stability.

Collateral: Assets pledged by the indemnitor or principal to secure a bond or guarantee performance. Collateral is returned upon fulfilling the bond's conditions but can be forfeited in cases of non-compliance.

Claim: A demand made by the obligee for payment from the surety company due to the principal’s failure to fulfill the obligations outlined in the surety bond agreement.

Bid Bond: A type of surety bond that ensures the bidding contractor (the principal) will enter into the contract at the bid price if awarded the contract, and will provide a performance bond.

Payment Bond: A surety bond issued to guarantee that the contractor will pay their subcontractors, laborers, and material suppliers, ensuring that all parties involved in the construction project are compensated.

Maintenance Bond: Also known as a warranty bond, this bond guarantees that the workmanship and materials of a completed construction project will be free from defects for a certain period.

Subdivision Bond: A type of performance bond used by developers and builders to assure local municipalities that the project will be completed according to state and local standards and regulations.

Completion Bond: A bond that guarantees a project will be completed free of liens, within the agreed upon timeframe and budget, often required in large construction or development projects.