What are Surety Bonds?
Surety bonds are sold to guarantee the performance of one party of a transaction and can cover nearly all kinds of contractual agreement. At their core, surety bonds make sure that a business or person performs the work they’ve been contracted to do. Surety bonds typically concern three parties: the principal party (who is under obligation), the obligee party (who requires service), and the surety (insurance company).1 For those occasions where the principal party does not render its services, the surety assumes the obligation in its place as stipulated by a separate contract.2 Surety bonds are similar to property and casualty insurance in that they are a form of risk management, but operate under a different set of principles and obligations.3
Who needs Surety Bonds?
Construction contractors frequently purchase surety bonds to ensure they can complete their contract and pay their suppliers and subcontractors in a timely manner. Other companies and businesses can benefit from a surety bond on a regular or case-by-case basis, depending on the industry.
All About Insurance can provide bonds in the form of:
- Performance and Payment Bonds – a bond that guarantees a job is satisfactorily completed by a contractor.
- Contractor Bonds – a surety bond specially targeted for contractors.
- Sub-Division Bonds – bonds that guarantee specific portions of a project.
- Court Bonds – a bond that protects from potential costs resulting from a court case’s outcome.
- Conservator Bonds – a bond that protects against the mishandling of a minor or disabled adult by his or her contractor (legal protector).
- Fidelity Bonds – covers losses derived from the fraudulent acts of individuals.
- Public Officials – safeguard the performance of public officials from losses imposed upon the taxpayer.
- Liquor Licenses – mandate compliance with state liquor laws.
Our agents specialize in business insurance needs and understand that every business needs a special form of coverage. All About Insurance agents will discuss those needs with you while crafting a policy that covers your unique business concerns.
1"SIC 6351: Surety Insurance." Encyclopedia of American Industries. Ed. Lynn M. Pearce. 6th ed. Vol. 3: Finance, Service & Public Administration Industries. Detroit: Gale, 2011. 2468-2473. Gale Virtual Reference Library. Web. 2 Nov. 2015.
2"Principal and Surety." Gale Encyclopedia of American Law. Ed. Donna Batten. 3rd ed. Vol. 8. Detroit: Gale, 2010. 94. Gale Virtual Reference Library. Web. 2 Nov. 2015.
3"SIC 6351: Surety Insurance." Encyclopedia of American Industries.