Business Bonds: What, Why, and How!

Your company may need some kind of business bond or license, whether it is a performance bond, surety bond, or liquor license.  It is important to know your needs, so you can remain protected.

At Insurance Town and Country, our bond specialists offer several small business bond solutions that can serve a variety of needs.  To help you realize what those needs may be, we have listed our services and provided a short explanation of each option.  If you would like any additional assistance, we are happy to help; just call or email either of our offices with the information provided below.

Surety Bonds: Any federal construction project over $150,000 requires a surety bond; your state, county, and local governments may have similar requirements.  It is important to check with a local zoning official before purchasing a surety bond.  These bonds act as a contract between three parties:
The Obligee (Your Client): The person receiving the obligation (usually contracting services for a project)
The Principle (You): the person or party on which the obligation (usually the completion of a project) lies
The Surety (Us): the bonding company that assures the obligee (your client) that the principle (you) can complete the obligation (the project)

Contractor’s Bonds: A type of surety bond that is purchased by licensed contractors that guarantees to any person or party that hires the contractor (you) that you will operate ethically and provide professional services that will not harm the obligee (your client).  If someone is negatively impacted because the contractor acts in an unethical manner, the bonding company (us) will provide financial reparation to the affected party.

Performance Bonds: A performance bond, or “contract bond,” is a type of surety bond that is purchased by a contractor for a construction project that acts as a guarantee that the work for that project will be satisfactorily completed.

Sub-Division Bonds: Also known as “site improvement bonds,” “completion bonds,” or “plat bonds;” subdivision bonds are a type of performance bond where the obligee is a public agency.  The principle promises to complete a public improvement project that is required to complete a private project (imagine all of the roads, gutters, and plumbing that are built so that houses in a sub-division can be properly completed).  These public improvement projects are dedicated to the public agency upon completion, but are paid for by the owner/developer; this way growth pays its own way.

Court Bonds: An umbrella term that covers a variety of surety bonds specific to court proceedings.  There are two major types of court bonds: judicial bonds and fiduciary/probate bonds.
Judicial bonds: limit your losses incurred from the result of a court ruling and may be classified as “appeal bonds” which are often required to appeal a court decision and act to discourage individuals from filing frivolous appeals and wasting the court’s time and money, or “bail bonds” which ensure that a person in jail will appear in court after being released into public, if the individual fails to appear, he/she forfeits the value of the bond.
Probate/Fiduciary bonds: ensure that individuals who have been appointed by the court to act as the caretaker of an individual or their assets fulfill their duties as assigned, especially those in relation to management of financial assets.  Specific types of probate/fiduciary bonds include “conservator bond,” “custodian bonds,” “executor bonds,” fiduciary bonds,” “guardianship bonds,” “nominal bonds of personal representative,” “probate bonds,” and “VA fiduciary bonds.”

Public Officials Bond:
This is a special surety bond that is required by public officials that ensures that he/she will loyally perform his/her official duties.

Fidelity Bonds: A broad definition that encompasses several specific bond types whose purpose is to act as an insurance policy that protects the policy holder from business losses due to the fraudulent activities of specific individuals, primarily dishonest employees.

ERISA Bonds: A type of fidelity bond that stands for “Employee Retirement Income Security Act of 1974; it protects employee benefit plans from incurring losses due to acts of fraud or dishonesty.

Liquor Licenses: This is simply a permit that is required before an establishment is allowed to sell alcohol.  There are several types of liquor licenses based on the type of establishment that is selling alcohol.  In addition, many municipalities limit the number of total liquor licenses that can be held in that location; depending on the type and location, an establishment may have to petition the area residents to receive a liquor license.


Denver Office                                                             Castle Rock Office
1735 E. 17th Ave. #3                                                    513 Wilcox St. #200
Denver, CO 80218                                                      Castle Rock, CO 80104
303–388-7216                                                 Phone: 303–688-1251
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