A surety bond is a financial agreement between three parties to ensure that one of the parties follows through on specified obligations and protect another party from loss if the obligations are not met. The party that must fulfill the requirements of the agreement is called the principal, the protected party is called the obligee, and the third party, which pays the obligee if the principal fails to meet the requirements, is called the surety. The surety is typically an insurance company from which you obtain the surety bond. The principal is the party responsible for obtaining the bond before moving forward with a project.
Types of Bonds
There are a handful of kinds of worldwide surety bonds that may be required of a principal.
- license or permit bonds
- performance bonds
- bid bonds
- payment bonds
- contract surety bonds
According to the professionals at Moody Insurance Worldwide, surety bonds entail a more extensive application procedure and more than one type may be necessary depending on the task you wish to accomplish and how much the enterprise costs.
Quality surety bonds are critical for many business transactions and contracted projects. With an experienced insurance provider, you can move forward with your work and accomplish everything you need to fulfill the surety bond’s obligations.