Contract Surety Bonds Insurance
Ensure your principal performer gets the job done.
Solutions to satisfy any surety bond requirement.
Contract bonds serve as guarantees that all terms and provisions found in a contractual agreement will be fulfilled.
If the contracted party fails to fulfill the duties according to the terms, the owner of the surety can claim against the bond to recover losses due to that failure. Contractors, subcontractors, and supplies all need contract bonds.
How do surety bonds work?
A surety bond involves three parties:
- The principal (bond “principal”): The persona or business with an obligation to perform.
- The obligee (bond “owner”): The person, company or governmental unit requiring the guarantee.
- The surety company (bond “surety”): Who provides the bond to guarantee that the principal fulfills their obligation.
As long as the principal performs their obligation, the surety company has no role. If the principal does not do what is required, the surety company has to meet the obligations. If this happens, the surety company is entitled to be reimbursed for losses and costs by the principal. Before a bond is written, the surety company may require the principal to provide an indemnity agreement from the business and also the personal indemnity of the principal.
What types of Contract Surety Bonds are there?
Provide financial protection to an obligee, giving assurance that if the principal contractor is the successful bidder, he/she can provide a performance and/or payment bond.
Provide financial protection to an obligee, giving assurance that if the principal contractor fails to perform the contract in accordance with its terms and conditions, and the obligee declares the principal contractor in default and terminates the contract, it can call on the surety to meet the obligations under the bond.
Provide financial protection to an obligee, assuring that the contractor will pay certain workers, subcontractors and material suppliers in accordance with the terms and conditions of the contract.