They say your word is your bond. At Competitive Edge, we believe that surety bonding, to back up that handshake, is the right choice to build trust for business with your clients.
The surety is the insurance company that issues a bond.
The obligee is the entity that gets paid out if there is a claim on the surety bond.
The principal is the business that buys the surety bond to protect their business.
Surety bonds are often used in contracts where trust or relationship has not yet been established and therefore, the company’s financial well-being is in question. In these cases, the hiring entity can request that the contractor be bonded. Surety bonds are a line of credit granted to the principal to reassure the obligee that the principal will fulfill their side of the agreement.
examples, not a comprehensive list.
Bonding and insurance together provide the protection you need to run your business and weather in inevitable accidents that occur in high-risk service industries. A surety bond will protect you from unnecessary claims or lawsuits in the even of an accident.
A surety bond is not an insurance policy. The payment made to the surety company is paying for the bond, but the principal is still liable for the debt. The surety is only required to relieve the obligee of the time and resources that will be used to recover any loss or damage from a principal. The claim amount is still retrieved from the principal through either collateral posted by the principal or through other means.