If you work in the insurance or construction industries, you may have heard the term “surety.” What exactly does this term mean? A surety bond is an instrument by which one party becomes legally liable for the debt, default, or failure of another party. This most commonly occurs when insurance companies take on the liability of contractors. The insurance company backs a contractor’s work and essentially becomes a professional co-signer to protect the individual or company who hired the contactor from the potential financial ramifications of a failed project. The contractor pays a fee (or premium) for the insurance company’s backing.
There are three parties in the typical surety transaction: the principal (i.e., the contractor, who is often mistakenly referred to as “the insured”), the obligee (i.e., the project owner protected by the bond), and the surety (i.e., the insurance company or guarantor). Surety bonds give the obligee assurance that the contractor will complete the work. The bond also vouches for the contractor. As part of the bond qualification process, insurance companies thoroughly examine the contractor’s financial statements, project history, staff, and equipment.
Types Of Surety Bonds
Flagler Insurance Agency can write a variety of Surety Bonds, including :
- Performance and Payment Bonds
- Contractor Bonds
- Sub-Division Bonds
- Court Bonds
- Conservator Bonds
- Fidelity Bonds
- Public Officials
- Liquor Licenses
Since there are many types of Surety products, it’s important to discuss your options with a licensed, professional bond agent. Our underwriting services are flexible to meet your unique business needs, and we specialize in a high-degree of customer care that will ensure maximum consideration for your assets.
Contact a Bond specialist The CFI Agency today to keep your commercial responsibilities protected