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A surety bond is a written agreement to guarantee compliance, payment, or performance of an act. Surety is a unique type of insurance because it involves a third-party agreement. If you're a contractor, bonds are a type of guarantee that you must have!
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The three parties in a surety agreement:
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Principal - the party that purchases the bond and undertakes an obligation to perform an act as promised.
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Surety - the insurance company or surety company that guarantees the obligation will be performed. If the principal fails to perform the act as promised, the surety is contractually liable for losses sustained.
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Obligee - the party who requires, and often receives the benefit of, the surety bond.
License & Permit Bonds
These bonds gurantee compliance with rules and obligations imposed by licensing laws or ordinances. Offerings include contractors license bonds and financial guarantee bonds.
Contract Bonds
These bonds provide a guarantee that contractors complete construction projects in accordance with specifications and make all required payments to subcontractors and suppliers. Contractors engaged in a variety of both government contracts and private sector work must secure bonds as required by project owners.
