Industry: Surety Bonds
A surety bond is a three-party agreement which legally binds together the party needing the bond (principal), the party requiring the bond (oblige) and a surety company providing the bond. In this three-party agreement, the surety company guarantees the obligations of the principal to the oblige will be performed in accordance with a contract, statute or regulation, permit, or court order.
A surety bond and an insurance policy are not the same. Surety bonds are credit instruments, not insurance policies. Consider this scenario: A moving company is insured and bonded – the insurance will protect the moving company if one of the vans is damaged in a car accident, but the bond will protect the customer if their belongings are not received as promised. Insurance protects the insured against a risk while a surety bond protects the project owner or oblige.
It is important to maximize your surety relationship with a dedicated surety practice and agency. Working with an independent insurance agency will give you access to a surety partner with the flexibility and surety access to match your company and industry with the best surety partner and program.
There are innumerable types of surety bonds. Among the most utilized are:
- Contract Bid Bonds, Performance Bonds and Payment Bonds for general contractors, specialty contractors and subcontractors
- Large Commercial Bid Bonds, Performance Bonds and Payment Bonds for “non-sticks and bricks” construction contracts and service contracts
- Subdivision/Site-Improvement Bonds
- Supply and Installation Bonds for manufacturing and supply contracts
- License and Permit Bonds
- Professional Services and Retail Bonds
- Tax Bonds
- Financial Industry Bonds
- Financial Guarantee Bonds
- Court Bonds
- Fidelity Bonds
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