Bonds

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.

1. The principal is the individual or business that purchases the bond to guarantee work performance or payment.
2. The obligee is the entity requiring the bond. 
3. The surety is the guarantor backing the bond (typically an insurance company). 

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:

• Contract performance bonds
• Payment and performance bonds
• Bid bonds
• Court bonds
• Maintenance bonds
  
• Supply bonds
• License and permit bonds
• Miscellaneous bonds

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Contact us today, and we can answer any questions you have about bond insurance.