what is a surety bond?
A bond guarantees the performance of a contract or other obligation. Bonds are three-party instruments by which one party guarantees or promises a second party the successful performance of a third party.
- The Surety—Is usually a corporation which determines if an applicant (principal) is qualified to be bonded for the performance of some act or service. If so, the surety issues the bond. If the bonded individual does not perform as promised, the surety performs the obligation or pays for any damages.
- The Principal—Is an individual, partnership, or corporation who offers an action or service and is required to post a bond. Once bonded, the surety guarantees that he will perform as promised.
- The Obligee—Is an individual, partnership, corporation, or a government entity which requires the guarantee that an action or service will be performed. If not properly performed, the surety pays the obligee for any damages or fulfills the obligation.
If you want to talk about your insurance needs, give us a call at 512-476-6566.
Information provided by CNA Surety,
Sioux Falls, South Dakota 57104.
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