Surety Bonds in Montana

A surety bond is a three-party agreement involving a principal (the party required to perform an obligation), an obligee (the party requiring the bond), and a surety (the entity guaranteeing the principal’s performance). It ensures that the principal fulfills their obligations to the obligee.

While both provide financial protection, a surety bond involves three parties and guarantees the performance of an obligation, whereas insurance involves two parties and protects against specific risks or losses.

Various professionals and businesses may require surety bonds, including contractors, auto dealers, mortgage brokers, and notaries, often as a licensing requirement or to guarantee contractual obligations.

Common types include contract bonds (e.g., performance and payment bonds), commercial bonds (e.g., license and permit bonds), court bonds, and fidelity bonds.

The cost varies based on the bond type, amount, and the applicant’s creditworthiness, typically ranging from 1% to 15% of the bond amount.

To obtain a surety bond, contact a licensed surety bond provider (us!), complete an application, undergo underwriting (which may include a credit check), and pay the premium upon approval.

Yes, it’s possible to obtain a surety bond with bad credit, though it may come with higher premiums due to the increased risk perceived by the surety company.

If a valid claim is made, the surety pays the obligee up to the bond amount. The principal is then responsible for reimbursing the surety for the claim amount and any associated costs.

The duration depends on the bond type and terms, ranging from a specific project duration to continuous coverage requiring periodic renewal

Generally, surety bond premiums are non-refundable once the bond is issued, as they cover the surety’s risk during the bond term.