There are several types of companies that look to buy a surety bond in New Jersey when they are opening for business. For some, a bond enables them to operate legally and provide required protections to the public they serve. Once a surety bond is in place, the company is officially obligated to follow all laws and regulations that apply to the business. The bond guarantees that the public, or the consumer, does not suffer a loss in the event a company cannot follow through on its promises. Among the businesses that buy surety bonds are:
- Mortgage brokers
- Insurance adjusters
How Surety Bonds Work
A surety bond in New Jersey is designed to benefit and protect the public, not the business. In order to be eligible to do the work, however, the business must first secure the bond. After getting bond approval, the business operator signs an indemnity agreement and arranges for payment. Collateral is not generally required to secure a bond. Instead, the company pays an agreed-upon percentage of the bond amount. New businesses may greatly benefit from this arrangement, as they do not need extensive capital or assets to get bonded and compete for jobs with other bidders. Hopefully, all work is done well and on time. The bond is in place to guarantee that if something goes wrong on a project, the consumer is protected.