On the surface, Surety Bonds seem pretty straightforward. They are a guarantee that you can be held liable for your debt, default, or failure to perform. But there is more to them than that, and there are some very specific types of surety bonds that apply to specific situations and circumstances. Let’s take a look at some of these differences.
One of the first things to know about surety bonds is that they are three-party contracts. The Surety is the party that guarantees performance of the Principal – the party that has the obligation. The Obligee is the third party for whom the obligation is being guaranteed. For example, an insurance company issuing the Bond would the Surety party, the contractor doing the job would be the Principal party, and the client would be the Obligee party. In this example, there are different Surety Bonds that may come into play. In construction, these are called Contract Surety Bonds, and there are 4 of them:
When must these be provided? Privately contracted jobs often have their own requirements, and city and state governments have laws and regulations for these requirements. For Federal jobs, any contract valued at $150,000 or more requires Surety Bonds.
Commercial Surety Bonds are another set of bonds that are typically required as a result of Federal, state, and local governments. These bonds are required of individuals and businesses in certain scenarios related to their performance of a job or role. They include:
As you can see, there is more than meets the eye with Surety Bonds. How can we help you find the right bond for your needs and requirements? Contact Brandon Patterson at 865.453.1414 or email email@example.com and he’ll be happy to help.