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What is a Surety Bond?

12432420.jpgA Surety Bond is a three-party agreement between the Principal, the Surety, and the Obligee. Pro Surety Bond is licensed in all 50 states and can get you the surety bonds you need. Call our representatives at 800-314-7003 and get started today!

The Surety Bond:

Surety Bond is a written agreement in which the Surety agrees to guarantee the performance and obligations of the Principal to the Obligee. The Principal’s commitments to the Obligee may be to perform a service to certain standards or to comply with some requirement such as licensing or permitting. It is important to understand that the Surety Bond is a credit relationship and NOT an insurance policy.

 
 

Who are the Three Parties to a Surety Bond?

The Principal:

(Contractor, Business Owner, Fiduciary, etc.)

The party who is to be bonded is called the Principal. The Principal, sometimes referred to as the Obligor, has an obligation to render a service or operate a business that conforms to ethical standards or complete a project to the contracted standards.

The Obligee:

(Project Owner, Government Agency, etc)

The party protected by the Bond against loss is called the Obligee. An Obligee may be a person, a firm, a corporation, or a government body. The Obligee is the party requiring the Principal to obtain a Surety Bond, which is a performance guarantee. 

The Surety:

(Carriers and Underwriters, ect)

The party who underwrites the bond (or credit relationship) is called the Surety.  The Surety posts the financial performance guarantee on behalf of the Principal in the form of a Surety Bond.   

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