A Surety Bond is a contract used between three parties that inherently guarantees any contractual obligations that are required by the party who is calling for the bond.
The three parties involved in a bond are:
- Principal - You, or whoever is being required to fulfill the obligation of a contract
- Obligee - The party or entity requiring the bond, or the project owner
- Surety - The party or insurance company that guarantees the obligation of the principal
How do surety bonds work?
It's pretty simple. Surety bonds guarantee that specific tasks and contractual obligations are fulfilled. This is accomplished by the three parties agreeing together in a legally binding contract that defines the scope of what is being agreed upon.
- The Obligee (entity, project owner, or government agency) requires a bond from the principal to reduce the likelihood of a financial loss.
- The Principal provides requirements and financial information to surety and receives approval to guarantee the contractual requirements.
- The Surety (insurance company) backs the bond and provides a line of credit in the case that the principal fails to fulfill their obligation.
The obligee can make a claim against the bond if the contractual obligations are not fulfilled. If the claim is valid, the surety will pay to meet the contractual obligations and can seek for reimbursement from the principal for any claims paid.
Our Partner Bonding & Surety Companies:
Types of bonds we can provide:
- Payment & Performance Bonds
- License Bonds
- Contractors License Bonds
- Court Bonds
- Fidelity Bonds
- Sub-Division Bonds
The process of getting a bond placed can be a difficult process. Carlson & Associate's licensed bonding agents have experience placing bonds and can help you through the process, whether it's a license bond for your business or a performance bond for a construction project. If you would like to know more about any specific type of bond please contact us for assistance.