BNJA Insurance and Financial Services

BONDS

Slider

BONDS

While there are many varieties, a surety bond is essentially an agreement between three parties–a principal, an obligee and a surety–assuring them all that something will happen. In general, surety bonds protect consumers and hiring parties, also known as the obligees, from fraud, abuse and penalties.

The most common surety bonds required in the U.S. fall under the license bond umbrella. These bonds are required to be filed with a federal, state or local business license to ensure that the bonded principal will comply with all rules and regulations mandated per their specific license.

Rates depend on multiple factors, including obligees’ risk preferences, applicants’ credit ratings and the type of bond required. For license and permit bonds, applicants with strong personal credit usually pay annual premium between 1% and 3% of the total bond amount. Applicants with higher personal risk or applying in higher-risk markets typically pay between 5% and 15%.

Get a Home or Auto Quote Now!

 

Contractor’s disciplinary surety bonds in California guarantee that principals (contractors) comply with the provisions of Division 3, Chapter 9 of the Business and Professions Code. If the principal fails to comply with these terms, the bond protects any person who is harmed up to the full amount of the bond. The principal must reimburse the surety for all damages paid out.

These bonds remain in full force and effect until canceled or violated. The surety can cancel the bond in accordance with the provisions of Sections 996.310 of the Code of Civil Procedure.

Applicants should be prepared to explain why the bond is being required. The contractor’s license number and classification(s) are required for underwriting.

All of these bonds are subject to underwriting consideration, so the price you’ll pay for your California contractor bond depends on a review of your personal credit report.

A defective or lost title bond is required for the current owner of a vehicle to obtain a new certificate of title for their vehicle when they are unable to provide evidence of ownership. By getting a surety bond, the owner of the vehicle may receive a bonded title which gives them the same ownership rights as a regular title. At the end of three years, the vehicle owner is no longer obligated to have a bond and may get a regular title.The state of California requires vehicle owners to get a bond to protect itself from any financial losses that might occur as a result of the issuance of a new certificate of motor vehicle ownership. In the event a claim is made against the bond, the surety will cover any losses up to the full amount of the bond and the principal must reimburse the surety for all money paid.

 

In order to issue a freight broker license, the FMCSA requires all freight brokers and freight forwarders to file either a surety bond (BMC-84) or a trust fund agreement (BMC-85). This requirement exists to ensure that licensed freight brokers and forwarders are held to certain standards as well as to prevent fraud or failure to pay motor carriers or shippers in a timely manner. If freight brokers or forwarders fail to comply with any terms of the surety bond, parties that suffer damages as a result may file a claim against the bond. 

By posting a California insurance broker bond, principals (insurance brokers) pledge to handle all funds received appropriately and apply them to the services and products requested by the client. If the principal or his/her solicitors and employees fail to conduct ethical and lawful business, the bond protects consumers from financial loss up to the full amount of the bond. The principal must reimburse the surety for all damages paid out.

The California Department of Motor Vehicles requires motor vehicle dealers to post surety bonds prior to conducting business within the state. The required bond amount depends on the type of license needed:

  • Motorcycle dealers, motorcycle lessor-retailers, ATV dealers and wholesale-only dealers (Less than 25 vehicles/year) = $10,000 surety bond
  • New motor vehicle dealers (25 or more vehicles/year) = $50,000 surety bond

By posting a California dealer surety bond, principals (dealers) are guaranteeing to the Department they will conduct business in compliance with all conditions listed in section 11711, which is also referred to as the Vehicle Code.

If the principal fails to comply with these terms, the surety will cover damages to harmed parties up to the full penal sum of the bond, and the principal must reimburse the surety for all damages paid out.

By posting a California process server bond, principals pledge to comply with the provisions of Chapter 16, Section 22350, Division 8 of the Business and Professional Code of the State of California. If the principal fails to conduct business according to these terms, the bond protects harmed parties from financial loss up to the full amount of the bond.

 

By posting a California tax preparer surety bond, principals (tax preparers) pledge to conduct business in compliance with the provisions of Division 8, Chapter 14 of the Business and Professions Code. Specifically, these bonds protect any person from a principal’s misstatements, misrepresentations, dishonesty, fraud, deceit or any other unlawful acts or omissions.

The California Department of Motor Vehicles requires vehicle verifiers to post $5,000 surety bonds to legally operate in California.

California vehicle verifier bonds are put in place to ensure that principals (verifiers) conduct all business according to law and, as a result, do not cause any loss to the state or to any person. If the principal fails to comply with the terms of the surety bond agreement and the letter of the law, the bond protects the state and any person from financial loss up to the full bond amount ($5,000). The principal must reimburse the surety for all damages paid out

GET THE BEST LIFE INSURANCE COVERAGE FOR YOU