- What is a Surety Bond?
It's a legal document that provides for monetary compensation should there be
a failure to perform specified acts within a stated period.
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- Who are the three parties in a Surety Bond?
The parties are: 1. The Principal... the party that is
bonded. 2. The Obligee... the party receiving the protection of the bond. 3. The Surety...
the party making the guarantee through the bond.
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- What does the Surety Bond do?
It guarantees that the obligation of the Principal will be performed.
If not, the Surety guarantees completion.
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- Who can be bonded under a Surety Bond?
Any individual,partnership or corporation that meets the standards and
requirements of the Surety company.
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- How does a Surety company decide who to bond?
At SBAI we use something called the "3 C's"-character, capacity and
capital. We decide based on the Principal's ability to do the work, past history of
work performance and the financial position to carry out future work.
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- What kind of obligations can be bonded?
Nearly all types of obligations can be bonded. The most common are
contractual performance of a service or payment of a sum of money.
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- Who benefits from a Surety Bond?
The party that purchases the bond, called the Principal, and the party that
requires the bond, called the Obligee, share the benefits of the Surety's guarantee.
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- What would create a claim under a Bond?
The Principal's inability to fulfill the obligation covered by the bond.
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- What if a Surety company has to pay a claim?
A Principal is legally obligated through the Indemnity Agreement to reimburse
the Surety company for any loss and expense incurred by the Surety. The Principal's
obligation to the surety could exceed the original obligation to the Obligee. The
Surety has recourse against the Principal in recovering the loss.
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- Who can make a claim under a bond?
In most cases, only the Obligee can make claims under a bond. The
Principal can never make a claim.
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- Is a Surety Bond Insurance?
No! A Surety bond might be provided by the same companies that write
insurance policies, but it is never considered insurance.
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- What are the types of Surety Bonds?
There are hundreds of Surety bonds. The most common are Bid,
Performance, Payment, Sub-Division, License and Permit, Lost Instrument and Court Bonds.
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- What is a Fidelity Bond?
This bond covers losses that result from dishonest or fraudulent acts of
employees covered by the bond.
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- Who would I call for all types of bonds?
Call an agency that specializes in bonding. One that knows all of the bond
markets. One that can help you cut through the red tape. And one that does the
job quickly. Bottom line, call Security Bond Associates, Inc... The "Bond
Aid" People.
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