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A bond is simply a guarantee between two parties, a guarantee which is insured by a third party - an insurance or bonding company who issues the surety bond.
What is a bond?
Quite simply, a bond is a guarantee that the terms of a contract or a task are fulfilled properly. Typically an entity (known as the Obligee) requests a bond as a guarantee of performance and/or payment. The bonding company (known as the Surety), acts as the guarantor and issues the bond. The entity purchasing the bond is the Principal.
If the principal fails to fulfill the task, or fails to abide by the terms of the contract, the Obligee will make a claim against the Surety. The underwriters will then expect the Principal to reimburse them for any claims paid. In the case of construction contracts, a separate Payment Bond is frequently required. The purpose of the Payment Bond is to guarantee that all parties (employees, subcontractors and suppliers) will be paid.
Some bonds we handle include, but are not limited to, the following:
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