At its core, a Colorado surety bond is insurance. There are three parties involved in the bonding process.
- Principal: The person/business (you) who is required to post the bond.
- Obligee: The government agency or person that requires the principal (you) to be bonded
- Surety: The institution that guarantees the obligee that the principal is bonded.
Bonds can be likened to credit as well as insurance. They assure the obligee that you will hold up your end of the deal and protects them from damages if you don’t. If you’re an individual or business in Colorado, sureties may be required for you to work on a contract with a government agency or other entity that requires you or your business to be “licensed and bonded.”
Bonds may also be required by a court. For instance, if you are designated as a guardian for a child, you may be required to get a guardian bond. If you do not fulfill your duties as a guardian based on the court order, a claim can be made against you. If you are designated as an executor of an estate, you will be required to get a fiduciary or probate bond.
How Do Bonds Work?
Surety solutions work as a type of insurance to the individual or agency that you are working for. For instance, you’re a contractor and you’ve been awarded a government contract to build a building. The agency awarding you the contract requires that you are bonded to ensure you will fulfill your contractual obligations. If you default on the contract, the surety pays the obligee (the agency you’re working for). While the surety will pay the obligee on a claim, you are still responsible as the principal to pay the surety back.
Sureties also work as a type of credit for the principal. Financially, it is better for your business to have surety credit than it is for you to post cash directly to an obligee. When you get a bond, you are only required to pay a percentage of the bond amount versus handing over a large amount of cash to an obligee. You also have the benefit of the surety claims professionals who work for the surety. These professionals will help ensure that you don’t become the victim of a false claim and can help provide a resolution in the case of a real claim. Because you sign an indemnity agreement when you receive a bond, the bond company works on your behalf and protects your rights.
Surety Bond Types
There are a wide variety of surety types. Some of the most common are contract bonds, construction bonds, license and permit bonds, auction bonds, escrow bonds, notary public bonds, and more. It is vital that you know which type of bond is required. If you get the wrong bond, then it will be rejected by obligee. The size of the contract may also dictate the type of bond you need. For instance, if your bond is for a specified contract and the project is over $100,000, the Miller Act requires that you obtain a contractor bond.
If you need a bond, but it is not for a specific contract, then there are three types of bonds it could fall under:
- License bonds (miscellaneous bonds) – These are the bonds you need when you’re required to be “licensed and bonded” but not for a specific contract. These bonds show your potential customers that you follow the law, business codes and other regulations that may be required in your industry.
- Fidelity bonds – These bonds are not required for a contract but are required as bond insurance for your business.
- Court bonds – Bonds that are required by a court to ensure you will fulfill your responsibilities under the law as ordered by a law or court.
If you’re not sure of the type of bond you require, we're here to help.
How Do I Get a Colorado Surety Bond?
The first step in getting a bond is to apply for one. You will need to provide your name, contact information, and information about your business. You will also need to know the bond type and amount that is required by your obligee. Information on your personal and business background is required as well, such as if you’ve been convicted of a crime or if you’ve had a business license suspended, revoked or denied. Information on your company’s owners and their credit will also be required. Fill out our free online quote application form, download and email it to us, or call our team of friendly bonding agents.
Once you are approved by us, you will have to pay for your bond. The rate will vary depending on where you live and the type of surety you need. Bonds can be paid for via credit card, check and money order. We can mail most bonds the same day an application is received if your credit qualifies.
Our team provides affordable surety bond Colorado and fidelity insurance. Every bond is prepared on a specific Colorado bond form, as prescribed by the entity requiring the bonding (obligee). Below is a list of commonly requested bond types in Colorado.
- Car Title
- Fidelity – All Kinds
- Lien Bond
- Medical Marijuana License Bond
- Notary Public
- Private Investigator
- Process Server
- Sales Tax
- Title Bond
- Utility Deposit