When it comes to surety bonds, many do not know what they are, especially when there is a necessity for one.
If you, like many others, are being required to seek a surety bond by an obligee and do not understand what they are and what they entail, here is everything you need to know.
What Is a Surety Bond?
A surety bond is a contract involving three parties: the person or entity performing the service (principal), the person or entity for whom the service is performed (obligee) and the entity that guarantees the principal will perform as agreed (surety). In the event of a loss or failure to perform, the surety bond pays the obligee, not the principal.
Often times, many do not understand the difference between a surety bond and insurance. To make it easier to understand, Surety bonds work more like credit than they do insurance.
Surety Bonds By Type
Surety Bonds consist of two different types: commercial and contract surety bonds.
In most cases, commercial surety bonds are the most commonly. Often, they only require a signed application and a current financial statement.
When dealing with construction projects, you will most likely encounter contract surety bonds.
These contracts are most commonly used in the construction industry to guarantee the performance of a contract.
These specific examples are a small overview of the hundreds of surety bonds out there.
So why do you really need a surety bond? It all boils down to one simple word: Protection.
When a surety company provides you with a surety bond, which you learned is a guarantee; they are vouching that you will follow the bond terms. If the bond guarantee is not fulfilled and damages are caused, a claim can be filed.
Surety Bond Authority, Inc. offers all of California easy access to surety bonds at affordable rates.
Don’t let your business stall by not securing the right surety bonds in time. Surety Authority offers stellar customer service and a quick turnaround.
Contact us today if you have any questions about the surety bond process at 800-333-7800.
