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Have you been required to purchase a surety bond for your business? Well we’re here to help you out by making buying a surety bond a little easier.
According to Wikipedia a surety bond is, “…a contract among at least three parties: the obligee - the party who is the recipient of an obligation; the principal - the primary party who will perform the contractual obligation; and the surety - who assures the obligee that the principal can perform the task.” This means that a surety is a type of insurance for the obligee in which a third party (the surety) takes financial responsibility for an entity (the principal) if the principal breaches a contract and doesn’t complete their contractual obligation. The surety will then pay for any damages that the principal may have caused as well as find a new contractor for the job.
Surety bonds ensure that a contractor will complete the work they are required to do. There are hundreds of surety bonds for different industries, many of which are industries that serve the public.
If you are required to purchase a surety bond, there are many places you can go. You will most likely have to communicate with an agent or broker to help you find the best surety bond rates. You can also go online and get a Surety Bond Quote at any time.
Find an Agent
Most surety companies sell their bonds through agents and brokers. These agents and brokers are often referred to as the surety bond producers.
Once the producer makes the submission, the paperwork goes to the underwriter. The underwriter will review the contractors’ business operations to ensure that the contractor is capable of completing the assigned project.
Every surety bond company has its own regulations for prequalifying a contractor. The prequalification process is one of the longest parts of the process.
If the bond is approved, then the surety expects the contractor to uphold their end of the contractual agreement. Once the bonds are written, the surety will ensure that the progress of the contractual obligation is moving smoothly and on schedule.
Hopefully this guide will make the surety bond process a little clearer for you. If you need to purchase a surety bond, contact a surety broker and request a Surety Bond Quote to see the bond amount you’re eligible for.