The Basics of Bonds in Canada
If you own a construction company, are an importer or have been appointed as an executor and need a surety bond in Canada, an ALIGNED Advocate will guide you through every step of the process. Commercial insurance and Canadian surety bonds are what we do!
In Canada, a surety bond involves three parties. Those parties are
- The Principal. This is the person offering their services or who is to be under an obligation.
- The Obligee.The Obligee is the client or person to whom the service or obligation is made. The Obligee needs protection because they will suffer some sort of loss if the Principal doesn’t live up to the agreement.
- The Surety. This is the third party, insurance companies (or surety companies) that guarantee that the Principal will fulfill the obligation to the Obligee.
The three parties enter into a contract that’s known as a surety bond in Canada. If the Principal doesn’t live up to their obligation, the Obligee can “cash the bond” in Canada and will be paid financial compensation or cover costs associated with fulfilling the obligation the bond was issued for. The Principal is also then responsible for paying the bond back what was paid out.
Contract & Construction Companies Surety Bonds in Canada
For Contractors, surety bonds in Canada help you stand out from other contractors and the flexibility and pricing of your bonding facility can be the difference between winning and losing a job.
There exist a wide range of construction industry types of surety bonds in Canada. Some of our bonds for Canadian contractors include:
- Bid Bonds
- Labour and Material Payment Bonds
- Performance Bonds
- Contractor License Bond
These are just a few examples of the construction bonds we offer in Canada. If you don’t see the construction bond you need, check out our Types Of Commercial Surety Bonds In Canada page or contact an advocate who will be more than happy to help.
Commercial Bonds in Canada
A commercial bond is a type of bond that is used in Canada by licensing bodies federal and provincial courts, financial institutions and private companies as a guarantee that the Principal will abide by all the necessary laws, regulations and terms of both the contract and the bond.
Commercial bonds in Canada can be grouped into four categories:
- Court Bonds which can be further broken down into:
- Judicial Bonds
- Fiduciary Bonds
- Customs & Excise Bonds
- License & Permit Bonds
- Lost Documents Bonds
Below are brief descriptions of each category of commercial bond.
Court Bonds
Court Bonds are required by a federal or provincial court in the following scenarios:
Judicial bonds are types of bonds that are used as protection from uncertainty in legal proceedings – like trying to cut down on the number of frivolous lawsuits. Examples include:
- Appeal bonds
- Defendant’s bond
- Injunction bonds
- Plaintiff’s bonds
Probate Bonds
Probate bonds (Fiduciary bonds) require that a person acting as an administrator, executor, guardian, trustee, etc., will fulfill their duties as required and will adhere to all relevant laws and court orders. Examples include:
- Administration/Estate Bond
- Foreign Executor Bond
- Guardian/Committee Bond
- Trustee in Bankruptcy Bond
- Waiver of Probate Bond
Customs & Excise Bonds
Customs and excise bonds may be required by imports/exporters, manufacturers, distributors, etc., as a guarantee that all applicable taxes and duties will be paid on goods sold in Canada.
Examples of customs bonds include:
- Custom Broker License Bonds
- Customs Bonded Warehouse Bond
- Freight Forwarder Bond
- Release of Goods Bond
Examples of excise bonds:
- Fuel Tax Bond
- Excise Tax Bond
- Excise Stamp (Tobacco) Bond
- Non-Resident GST Bond
License & Permit Bonds
License and permit bonds are required in certain, regulated industries that require a license as a guarantee that the business or individual complies with all the necessary regulations as a way to protect the public.
Examples include:
- Automobile Dealer Bond
- Collection Agency Bond
- Grain Dealer Bond
- Private Investigator / Security Guard Bond
Lost Document Bond
A lost document bond guarantees that if a financial document is lost, the financial institution will issue a replacement. The financial institution is reimbursed if both documents are cashed in.
Examples include:
- Fixed Penalty
- Open Penalty
- Waiver of Probate
How to Get a Surety Bond in Canada
By choosing the right Canadian surety provider.
At ALIGNED, commercial insurance is our expertise, we don’t handle any other type of insurance products and when you sign on with an ALIGNED advocate, they are with you through the entire process, we don’t pass our customers off from one broker to another.
We carry a full selection of commercial bonds so even if the one you need isn’t mentioned here, contact an advocate who is more than happy to help.
