Questions about Surety Bond Companies
As the leader in providing bonds (bid bonds, performance bonds in construction, etc.), it is not uncommon that we get questions from people wanting to know exactly what a bonding company is, so we thought that we’d give you some information that could be worthwhile. Bonding companies also offer bail bond services, emphasizing their availability and professionalism in assisting individuals in jail.
Bonding companies typically provide several lines of insurance, such as Errors & Omissions (E&O) insurance or Property & Casualty insurance as well as bonds.
The Bond side of the Business
A bond’s formal name is surety bond. It is written by an insurance coverage company via an insurance coverage firm. Swiftbonds, as you’ve probably already guessed, is a bonding insurance coverage agency. Just like all insurance coverage firms, there is a need for a certified insurance policy representative that helps the company. We were selected to help service bonds by the insurance coverage company that underwrites the bond.
Three Parties
A surety bond is a among three separate parties: The principal (that’s you, the contractor), the obligee (the general contractor or agency),) and the surety (the insurance company that makes certain that the principal’s commitments will be done).
Construction bonds are often mandated by certain construction projects to guarantee that they are executed according to the specified requirements.
Pursuant to this arrangement, the surety agrees to uphold the contractual assurances made by the principal if the primary obligor fails to uphold its guarantees to the obligee. In plain language, if you are unable to finish a job, the insurance company can either get someone else to finish or pay damages, etc.
The principal pays a premium for the bonding company’s financial stability in the form of a surety bond. If there happens to be claim and it turns out to be a legitimate claim, the surety will pay it and, after that, resort to the principal for repayment of the claim and any kind of lawful charges sustained.
Can anyone be a Surety Bond Agent?
No. A bonding company will not contract with just anybody off the street. A bonding agency is truly an insurance firm and should be staffed by accredited Insurance policy Agents. Bonding Companies are governed by the very same strict specifications as all insurance firms and follow state statutes established for insurance policy business.
