“When it comes to a specific project or service, you want to ensure that your company will perform the task correctly and within a reasonable amount of time. After all, you want to stay on good terms with the client, establish a strong reputation and secure future projects. A surety bond, or bonding insurance, is a reliable way to guarantee everything goes as planned. Learn more about what is bonding insurance and how it can protect you and the client.
The Basics of a Surety Bond
According to Moody, even though a surety bond can also be called bonding insurance, it is technically not a formal insurance plan. A surety bond is a contract that guarantees your company will complete a project under agreed terms, and if this is not the case, the bonding company will pay the client a certain quantity, leaving you responsible for repaying the bonding company.
Surety Bond Participants
A surety bond essentially has three main parties in the agreement. These participants are:
The bonding company, or surety, who pays the client
The principal, which is your company performing the project
The obligee, or the client, who is paid according to the agreement
No matter the type of project you must complete, a surety bond will protect you and the obligee from the unexpected. It is a strong agreement that ensures all three parties follow their part to lead to a satisfying finish.