A surety bond is a promise to be liable for the debt, default, or failure of another. It is a three-party contract by which one party (the surety) guarantees the performance or obligations of a second party (the principal) to a third party (the obligee).
There are two broad categories of surety bonds: (1) contract surety bonds; and (2) commercial (also called miscellaneous) surety bonds.
Commercial Surety Bonds
Commercial surety bonds cover a very broad range of surety bonds that guarantee performance by the principal of the obligation or undertaking described in the bond. They are required of individuals and businesses by the federal, state, and local governments; various statutes, regulations, ordinances; or by other entities.
Commercial surety bonds can generally be divided into five types of bonds:
We have the markets to bond all types of contracts for all classes of business. Bonding on personal credit up to $700,000 and FAST bonding up to $1,500,000.We can assist you in the placement of your construction bonds with one of our A-Rated, Treasury Listed markets to give you a competitive edge in the construction industry.
Contract Surety Bonds
Surety bonds that are written for construction projects are called contract surety bonds. A project owner (the obligee) seeks a contractor (the principal) to fulfill a contract. The contractor, through a surety bond producer, 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 contract surety bonds:
When you’re searching for Surety Bonds, consider consulting Irion Insurance Group.