City of Rainbow City Performance of the Work Bond

Businesses are required to file a bond with the City of Rainbow City (the "Obligee") to activate their license. The bond protects the Obligee by transferring to a surety bond company the cost of ensuring the public is compensated for damages resulting from a licensed business breaking licensing laws.

Performance of the Work Bond

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How much does the City of Rainbow City Performance of the Work bond cost?

City of Rainbow City Performance of the Work bonds cost 0.5% of the bond amount.

Is a Credit Check Required for City of Rainbow City Performance of the Work Bonds?

Credit checks are not required for the City of Rainbow City Performance of the Work bond.

Why is the City of Rainbow City Performance of the Work bond required?

Businesses are required to purchase and file a bond with the City of Rainbow City to activate their license. The bond protects the Obligee by transferring to a surety bond company the cost of ensuring the public is compensated for damages resulting from the failure of a licensed business complying with the provisions of licensing laws.

How does the City of Rainbow City Performance of the Work bond work?

City of Rainbow City Performance of the Work bonds must be issued by an insurance carrier admitted by the AL Department of Insurance. The insurance company issuing any surety bond, such as the City of Rainbow City Performance of the Work bond, will also be referred to as the “surety company” or the “bond company”. The business is referred to as the Principal, the surety bond company as the Obligor and the City of Rainbow City as the Obligee.

The surety company provides the Obligee a guarantee (the surety bond) that the customers, vendors and employees of a licensed business will receive payment for financial damages due to a violation of licensing law up the bond amount stated on the bond form (“penal sum”). The bond company also directly receives claims from the public and determines the validity of claims. Ultimately, the licensed business owners are responsible for their actions and required by law to reimburse the surety company for any payments made under the bond or face indefinite license suspension.