Surety Bond Information
Surety Bonds - North Carolina • South Carolina
Serving Wilmington, Shallotte, Jacksonville, Lexington, Mount Pleasant, Charleston, St. Stephen & surrounding communities.
Surety bonds are used to provide a wide range of guaranteed agreements involving three parties; a principal (usually a business owner), a surety (the entity held responsible for the debt if the business owner defaults), and the obligee receiving the guarantee that an obligation will be fulfilled by the principal as promised. While private entities can be obligees too, contract bonds are often required by law, therefore, government entities are commonly bond obligees. Outside of contracts, surety bonds are available to comply with various legal and statutory requirements as well. Bonding can help businesses win contracts, abide by legal requirements, and provide reassurance to their customers.
Sheally Insurance Group agents are available to help determine the type of bonds that are best suited for your unique circumstances. Contact our agency for assistance today!
Who are the three parties involved with a surety bond agreement?
- The Principal is the person, company, or entity carrying the bond. If you are a contractor, you would purchase a bond in your name.
- The Surety is the company that issues and maintains the bond. The principal pays them to maintain the bond.
- The Obligee is the individual or entity who benefits from the guarantee. They will be the party to make a claim on a bond if obligations are not met.
Types of Surety Bonds
- Fidelity Bonds
- Public Official Bonds
- Judicial Bonds
- Fiduciary Bonds
- License and Permit Bonds
- Contract Bonds (Bid and Performance Bonds)
- Miscellaneous and Federal Bonds
- Notary Bonds
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Sheally Insurance Group agents will work closely with clients to help ensure bonds are purchased according to their needs and the correct requirements.
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How do bonds differ from insurance?
While bonds provide a financial settlement for obligees, they are not the same as insurance. With insurance, the insurance company pays a settlement on your behalf. Under a bond, you must pay the settlement to the affected customer. Therefore, the bond functions like a guarantee that you will cover the customer’s losses in case of a problem on your end. It tells your clients that you have the financial backing behind you to do their work appropriately.
How much bonding do you need?
Many variables are involved in determining how much money principals need to carry on bonds. For example, industry standards and a company’s net worth often play a role. However, one of the best places to look for any specified bonded amount is within a legal contract itself. Many obligees will require a principal to carry certain bonds.
TOGETHER IS BETTER
It’s true! It pays to purchase insurance coverage together. You could save money by bundling multiple commercial insurance policies.