A surety bond ensures contract completion in the event of contractor default. A project owner (called an obligee) seeks a contractor (called a principal) to fulfill a contract. The contractor obtains a surety bond from a surety company. If the contractor defaults, the surety company is obligated to find another contractor to complete the contract or compensate the project owner for the financial loss incurred.
There are four types of surety bonds:
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surety bonds – also known as performance bonds – are distinct due to the fact that they help to encourage business, support economic development and protect consumers, taxpayers and businesses in a variety of ways. Most commonly, surety bonds are known for:
In regards to this level of coverage, there are thousands of classes of bonds available. For example, contractors often require a particular class of bonds called “Performance and Payment” bonds. Typically, the common element to all surety bonds is that a bond is a financial or performance guarantee.
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Let Mike McFarlin Insurance Agency help you choose a policy that will fit your individual needs. Protecting your assets, whether personal, business, or both, is our goal. A well-chosen policy can lessen the impact of some of life’s most common, yet unforeseen perils. We’re here to help when you are considering a bond for your business.