Surety Bond
What is Surety Bond?
A surety bond is a mutually binding contract between three parties known as the Obligee, the Principle, and the Surety. The Obligee is the entity that requires the guarantee of a surety bond from the Principle. The Obligee may be a government agency, a company, or an individual. The Principle is the person or entity applying for and purchasing the bond from the Surety. The Surety is the insurance carrier. Surety bonds help manage risk for the principle by transferring some of that risk to the Obligee. Essentially, a surety bond is a way of guaranteeing financially, that an obligation will be fulfilled.
The process of a surety bond is simple. The Obligee requires the Principle to provide a surety bond. The Principle applies for a surety bond from the Surety. Through underwriting the Surety evaluates the Principal’s wherewithal to fulfill the contract or obligation. After the assessment, the Surety will extend a surety credit to the principle. By extending this credit to the Principle, the Surety is telling the Obligee that the obligation or project is going to work out. If the Principle does not fulfill the contract, the Obligee can make a claim on the surety bond to recover losses. In general, a surety bond guarantees that the Principle understands the requirements and regulations outlined in a license or contract. A surety bond’s specific guarantee depends on the bond type and the actual language of the bond. Surety bonds are a means to protect governments, companies, and consumers from nonperformance or violations by the Principal. A surety bond may also guarantee that the Principle is operating within the laws and regulations. When considering a surety bond, keep in mind that alternatives can be costly. Escrowing your own assets can lead to decreased operating capital and weakened a balance sheet. Excessive costs can be avoided because surety bonds are available at a reasonable premium. TOR Insurance Services has the experience and expertise to meet your surety needs. With over 45 years in combined insurance industry experience, TOR Insurance Services has continually evolved to help enhance businesses operating in both established and groundbreaking markets. TOR insurance Services specializes in underserved and hard to write markets. We have a reliable, dedicated, and responsive team that will work with you to ensure that you receive your surety bonds quickly. Contact us today through our website or email jose@torinsurance.com to discuss how TOR Insurance can meet your surety needs. |
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