Sureties in the state of Vermont serve the same kind of purpose as in other states, acting as a kind of insurance against subpar performance or non-compliance with rules and regulations by hired contractors providing professional services. One of the more common types of sureties issued in Vermont is the license and permit bond, which allows a professional person to legally operate a business and provide a service within the state’s borders. People who hire bonded contractors can have some level of assurance that the contractor has had a certain level of training, and is qualified to provide the services associated with their business.
What Are Vermont Surety Bonds?
A bond is a contractual agreement between three parties, namely, a principal, an obligee and a surety company. Each of these three parties serves to provide a balance in a contractual agreement which makes it workable and useful to all parties involved. The principal is a contractor hired to provide professional services to the obligee, which is some company or organization having a body of work to be done, for which the principal has been hired. As a guarantee that the work will be done correctly, the obligee requires the principal to purchase a bond, and the bond is sold to the principal by a surety company, which is a financial organization acting in the role of insurer within the framework of the agreement.
How Does a Surety Bond Work in Vermont?
As you might guess from the above, a surety works something like insurance does, in that it provides a kind of guarantee, and when that guarantee is overturned, a claim can be made against the bond for the recovery of monetary damages suffered by the obligee. In the contractual agreement, the obligee requires this kind of insurance that a job will be completed as stipulated in the terms of the bond, as a means of motivating or enforcing compliance and quality workmanship from the contractor (principal).
Although principals are required to purchase the surety, the only real benefit to them in doing so is that it makes them eligible to be hired by the obligee for the job in question. When all work specified is performed as agreed upon, nothing at all happens with the surety, which parallels the insurance mechanism — while an insured client remains alive, the insurance policy can be considered dormant.
However, when a contractor fails to live up to the pre-specified terms of the bond in the work agreement, the obligee stands to suffer damage to his business, and is therefore entitled to make a claim against the dollar amount of the bond. In this situation, the surety company would be obliged to pay out the amount of that claim, just like insurance, and would later seek to be fully reimbursed for that amount by the involved principal, who defaulted on terms of the agreement.
If you are ready to get bonded in Vermont, then call our office today. We’re the bonding experts since 1984! We can cover all your bonding needs, even for those with poor credit.
Types of Bonds in Vermont
The two main categories of bonds available in the state of Vermont are commercial bonds and construction or contract bonds. Construction bonds include subcategories such as site improvement bonds, bid bonds, performance bonds and supplier payment bonds. Virtually all other types of bonds issued today fall within the other broad category of commercial bonds, and that broad grouping takes in literally hundreds of different types of bonds.
Some of the most commonly issued categories of commercial sureties are fidelity bonds, tax bonds, pubic official bonds, court bonds, fiduciary bonds and license and permit bonds. Regardless of the specific type of bond in either category, all sureties are intended to serve the same basic purpose, which is to provide some level of guarantee against malpractice, fraud or unsatisfactory work performance.
Required Sureties in Vermont (Industries)
Virtually every industry in the country makes use of sureties, and it’s easy to see why that would be so, since all industries would have a keen interest in having an assurance of high quality workmanship and compliance with any laws or regulations pertaining to work activity. One of the industries which makes greatest use of sureties is the construction industry.
Without the guarantee of workmanship and compliance that a surety provides, there would be little or no motivation for the many contractors on a major construction project to comply with all work regulations and to provide the necessary high quality workmanship for major construction. The terms of a construction surety act as powerful incentive for contractors to live up to contractual terms, since any claim made against the surety would ultimately have to come out of the contractor’s pocket. It’s also true that the damage to a contractor’s reputation could be very serious, and might reduce the number of professional opportunities in the future.
Government organizations at all levels are also major users of bonds, since these employers must account for all expenditures and major project work to taxpayers who have funded them. Many government agencies even have strict hiring procedures for any contractors engaged to do work on government projects, with bonding being a standard requirement.
How to Get Bonded
Acquiring bonds in the state of Vermont is a very easy process, especially since most bonds can be obtained via online application. When you’re ready to purchase a specific type of bond, the best approach would be to contact NFP, the industry leader and most respected financial organization for providing surety bonds Vermont.
After your application for a surety is approved, the surety company will prepare an indemnity agreement which lists the terms of the bond agreement as well as the dollar value of it, and will send that indemnity agreement back to you. Once you’ve signed and notarized the agreement, it can be returned to the surety company, at which time the actual bond will be prepared and issued to the involved principal.
Our team provides affordable Vermont surety bonds and fidelity bond insurance. Every Vermont bond is prepared on a specific Vermont bond form, as prescribed by the entity requiring the bonding. Below is a list of commonly requested bond types in Vermont.
- Auction Bond
- Contractor Bond
- Mortgage Broker
- Notary Public
- Private Investigator
- Process Server
- SAG Bond
- Sales Tax Bond
- Defective Lost Title
- Utility Deposit