Bonds are becoming more common in our society today. You might be wondering what a surety bond is and why they are necessary. Individual business owners, corporations, federal and state governments and municipalities may request or require a surety bond of some sort before entering into an agreement in order to secure the investment. Surety bonds can act as reinforcement for obligatory relationships between parties and/or a support for persons acting under a license or permit. A surety bond is a contract drawn up between three parties: the surety, obligee and principal. The surety company promises to become responsible for the principal’s commitment in the event of a default. The surety may either pay the agreed bond amount to fulfill the contract requirements or arrange to have the contract upheld by another. The bond acts as extension of credit for the principal, protecting the investment by the obligee.
Construction bonds are one of the most common surety bond categories today. General contractors and sub-contractors are usually required to provide perspective owners with a apostilles bond to support their performance and presented terms of building contract. Because surety bonds are initiated by the principal, the principal agrees to pay premiums (generally annually) to the surety company in exchange for their support. Surety bond companies support their principals with a specified amount of financial backing in order to induce contracts and promote creditability. These bonds are underwritten with the expectation of a successful contractual relationship.
Often times, surety bonds are offered by companies like banks and insurance agencies as an additional service for their customers. Today, there are many emerging bond companies that are focused only on bond contracts. Surety1 is one such lender (www.surety1.com). They offer a wide array of surety and fidelity bonds, including Commercial bonds, Federal bonds, License and Permit bonds, Mortgage Broker Bonds, Performance and Payment bonds, Court bonds and much more. Surety1 is focused on fast, friendly service and supports their efforts with competitive rates and over 30 years of combined experience in the industry.