For those working in certain industries, being “bonded” is either desirable or legally required in order to proceed with a project. Surety bonds provide protection against damages if a contract is not completed as originally agreed upon.
How Does A Surety Bond Work?
A surety bond is a protection that serves as a contract between three parties.
- The principal, or the professional or business doing the work. They are the one in charge of purchasing the surety bond to guarantee the quality of their work on the project.
- The obligee is the one for whom the principal is working and who can recover losses if the work is not completed as agreed upon.
- The surety is the organization that is issuing the bond; it guarantees that the principal will do the agreed upon work as specified. It is wise to rely on a surety that has a history of success in insurance and other financial protection measures to ensure that your contract is robust.
Who Are The Parties Involved In A Surety Bond?
A surety bond is a protection that serves as a contract between three parties. The principal, or the professional or business doing the work, is the one in charge of purchasing the surety bond to guarantee the quality of their work on the project. The obligee is the one for whom the principal is working and who can recover losses if the work is not completed as agreed upon.
The surety is the organization that is issuing the bond; it guarantees that the principal will do the agreed upon work as specified. It is wise to rely on a surety that has a history of success in insurance and other financial protection measures to ensure that your contract is robust.
Who Needs Surety Bonds?
Surety bonds can be helpful in a wide variety of situations, though government contracts make up a large portion of the surety market. Still, commercial bonds are often required as part of a state’s process of granting licenses, and such bonds discourage businesses in the service industry from taking advantage of consumers who use their services. Some specific fields such as construction also take a large portion of the surety bond market for performance, supply and maintenance.
Trust Atlas Insurance Agency With Your Surety Bonds Needs
Whether you are trying to learn more about surety bonds or you are looking for a reputable surety to provide one, be sure to trust the best. Atlas Insurance Agency is Hawaii’s premier leader in surety and bonds, with a team that has over 20 years of combined experience. How can we help you with your next project?