Surety Bonds


Surety bonds are responsible for fuelling today's business world. Contracts that are issued across many different industries are often secured by the issuing of surety bonds. Without these bonds, customers would not be able to have a guarantee for the proper delivery of goods and services. In addition, states would not be able to regulate the activities of licensees and other businesses operating within their jurisdiction.

Surety bonds are commonly issued in the licensing, construction, motor vehicle, and other related industries. They ensure safe, quality and reliable services to customers, as well as compliance of businesses to the rules and regulations set forth by various states.

Understanding how surety bonds work can be complicated. It is therefore important to get a grasp of what surety bonds are, how they work, and how they are issued.

What are surety bonds?

In the simplest terms, a surety bond is a contract that is signed among three parties- the principal, the obligee, and the surety. The obligee is the person/business that is seeking a particular service, while the principal is the entity (often a business) that is providing that service.

When an obligee seeks the services of a principal and negotiates a contract with them, they may need to have some sort of assurance that the principal will deliver the services as promised. This is especially important in industries such as construction, where the owner of a project has a lot at stake when they seek out a contractor to complete a project. If a contractor does a poor job on the site or causes damages to the property of the project owner (the obligee), the obligee faces high financial risk as a result.

A surety bond is therefore issued by the contractor (who is the principal in this case) in order to ensure compensation to the obligee for any breaches of the negotiated contract.

The surety bond therefore acts as a safety net for the obligee in case things go wrong during the project. The third party that is involved is the surety. The surety is basically an insurance company that provides surety bonds to principals at a fee. The surety agrees to pay any valid claims that are made by the obligee, after which the principal will compensate the surety at a later date. The two parties agree on the terms of payment, premiums, eligibility, etc.

The dual role of surety bonds

Surety bonds serve two important functions. They serve as an insurance policy for the obligee against damages incurred, and an extension of credit to the principal when a claim is made against them. In some cases, when businesses that are licensed by the state fail to adhere to the established guidelines, they may have a claim made against their surety bond by the state for any damages that they caused.


More Resources

Guide to Life Insurance
Here is a useful guide to life insurance. Simply put, a life insurance policy provides a lump sum payment upon death of the policy holder.
What Should I Do About Billing Problems When Using HSA Money?
If you run into a billing problem or misunderstanding with a hospital or doctor's office for which you're planning to use money from your Health Savings Account (HSA), you could be in trouble.This article will help you understand how hospital and doctor visits are different when paying with a Health Savings Account.
MSA or HSA: Can I Keep My MSA Or Do I Need to Convert it into an HSA?
The Medical Savings Account (MSA) is an older form of the Health Savings Account (HSA).You cannot open a new MSA.
Life Insurance Without Life Value: Why Young People Are Snubbing Financial Advice
This article is written by a 27 year old female (borderline Generation X / Y) called Rachel. Rachel spent six years at university, has no outstanding debts with the exception of government student loans.
Why Would I Need Auto Insurance Specialists?
If you do not understand the way that auto insurance works, you really need to deal with auto insurance specialists. These are the agents that work for the insurance companies and they can answer any questions you might have.
Senior Health Care Insurance
Health Insurance For Seniors On The NetWhen a good friend of mine inquired where he could obtain information about medical insurance for his out-of-state, elderly mother, I told him to try the Internet.He reported back to me about a week later, in desperation: "I am giving up, I am too confused.
Affordable Life Insurance!
So, you've decided to purchase life insurance. Well then, you have made a good decision! If you have dependents, you know that you must provide for them long after you are gone.
A Free Term Life Insurance Quote Is Only Easy To Obtain
By searching online for life insurance, you can get a free term life insurance quote with no obligation to buy. In order to get the free term life insurance quote, you fill in the form on the appropriate page of the life insurance company website.
Health Insurance Plans - Benefits to Different Plans & Providers
Health insurance plans vary in their coverage and prices. The more coverage offered, the higher the premiums.
Choosing Buy-To-Let Property Insurance
Risk is an area often overlooked by landlords, but failing to protect the main assets of your business, which often have borrowings secured against them could lead to ruin.Landlords often fail to understand the types of insurance risks that they are exposed to and are unaware that insurance coverage for buy-to-let investments is very different to the standard household insurance policies that cover owner-occupied dwellings.
Whole Life Insurance - Whole Life Insurance Information
The original purpose of life insurance was to provide for your family in the case of your death. While this purpose is still the most potent reason to take out a life insurance policy, there are a number of other ways that life insurance can be used to benefit you and your family, even while you are still alive.
Sisters Are Insuring Themselves: Finance is the New Feminism
According to a study by LifeSearch, the number of women in the UK buying life insurance in the UK has doubled over the last six years. As women are increasingly closing the gender related pay gap and even becoming the main breadwinners in a household, they are also becoming more vigilant about their finances and less financially dependent on their partners.
Everyone Wants The Cheapest Automobile Insurance Quote
When you are looking for an automobile insurance quote, the first thing you usually do is pick up the phone and start calling the various insurance companies in your local area. Then you have to wait for them to call you back with a quote, which quite often is very similar to what you are already paying.
Cut Business Insurance in 8 ways
1. Comply with recommendations from company engineers and loss control.
Need A Car Insurance Comparison? Dont Have Time?
If you decide not to do a car insurance comparison and simply renew your insurance at the same rate, you could be paying away needless amounts of your hard-earned money. By doing a car insurance comparison, you could get a cheaper rate than what you are presently paying.
Are You Overpaying On Your Home Insurance Policy?
For many consumers the cost of daily living is becoming increasingly higher. High gas prices, rising automobile costs and the cost of buying a new home can be very troublesome.
Health Insurance And Insurance Brokers
If you are in the market to purchase your own health insurance coverage you can save yourself precious time and money by shopping and comparing policies right online. Sites dedicated to giving you quotes on various types of insurance make it very easy for you to get an idea of what your coverage and costs will be.
Is Your Auto Insurance Company Rated?
Several national rating institutions rate insurance companies. Do coverages, rates, and service vary from company to company? Why can you pay less with one company than another can for the same coverages? Choosing the best insurance company for you is a crucial financial decision.
How To Negotiate A Settlement With An Insurance Claims Adjuster
You and I. M.
Poor call centre performances driving motorists online for insurance
In their efforts to cut costs more and more finance companies are looking to use offshore call centres to provide their customer services and administration. This is especially prevalent in the insurance industry, where it seems as if there is a newspaper announcement of previously UK based services migrating abroad every day.

More Insurance Information:

Related Articles

Affordable Health Insurance in Utah


The condition of utah Health Policy Venture (UHPP) lately opined that the Public Worker Wellness Strategy (PEHP) should be available to all little companies in The condition of utah as a way to create health insurance plan protection more cost-effective

Affordable Life Insurance on Children


Most people associate affordable life insurance protection coverage with maturity or even seniority. Why? Because the main objective of life insurance for children protection coverage is to give rise to the well-being for yourself members members in your stead.

Useful Life Insurance Information For California Residents


California residents have a baffling number of choices when it comes to Life Insurance products. The choice of a life insurance plan in California follows the specific reasons and needs of the individuals buying the plans.

What Are The Key Differences In Different Medicare Supplement Plans?


Medicare, a federally funded healthcare program, provides coverage for hospital and physician expenses. However, Medicare doesn't provide coverage for all sorts of medical expenses and thus the need for Medicare supplements comes into play.

Shop Around to Find the Cheapest and the Best Car Insurance Online


These discounts are offered because the company saves on extra costs offered to insurance agent as well as the costs involved in maintaining a good looking brick and mortar structure. These savings made by the company are automatically transferred to their customers in the form of discounts.

Get Benefited Further From Insurance Supplement to Medicare Louisiana


All residents in Louisiana are eligible for protection through plans from insurance supplement to Medicare Louisiana. If you want to purchase one of the policies, the quickest and easiest way is to look for the option on internet.

What Does Protection and Indemnity Insurance Cover?


When it comes to protecting marine items for shipping and other routine operations, owners may be required to have protection and indemnity insurance (P&I). This not only protects the owner in the event of a problem on the water, but it can also provide protection at the docks or in the shipyard.

Why You Need Boat Insurance And How To Get A Good Deal


With insurance deals there is a lot of small print that needs to be understood, and an honest insurance agency will talk you through everything you need to understand about your insurance deal in a way that it will be easy for you to understand.

Are You Ready? The Health Insurance Marketplace Is Coming


No doubt you've been starting to hear about the new Health Insurance Marketplace, a key part of the health care law that will be open for business on Oct. 1. But you probably still have questions. Well, we've got answers.

Permanent Life Insurance Has Real Benefits


When you are young, you are offered perfectly sound advice on a wide variety of topics, which you often ignore. One piece of advice that shouldn't be ignored is the suggestion to consider purchasing a permanent life insurance policy early in your working life, while you're young and healthy.

ObamaCare: What You Need to Know


Many of the key provisions of the Patient Protection and Affordable Care Act -- better known as ObamaCare -- are already coming into effect this year.

Whole New Way to Shop For Health Insurance Coming in October 2013


Thanks to the new healthcare law, starting October 1st there'll be a whole new way to shop for health insurance for yourself, your family or your small business: the Health Insurance Marketplace.

Insurance Tips: Preparing For the Unexpected


Nearly 1.5 million families lose their homes to foreclosure each year because of unpaid medical bills, according to an article published in the Health Matrix: Journal of Law Medicine.

Resolving to Perform an Insurance Checkup


Many people make New Year's resolutions to improve their health, such as snuffing a smoking habit, joining a gym or scheduling a checkup. But they rarely think about health insurance.

Ways You Can Save Money on Health Insurance


The overwhelming mass of uninsured Americans is firsthand evidence that health insurance is too expensive -- as if we didn't already know.