What is a surety bond? Why would you need one?

A surety bond refers to a legal and binding contract that serves as a financial guarantee that an individual will fulfill their obligations. The licensed insurance professionals at Surety Ins Inc. of Alabama offer various surety bonds, and the following short guide explains what a surety is and when you would need one.

Who are the Named Parties in a Surety Bond?

Surety bonds offer protection to the obligee from financial loss in the event that the principal fails to fulfill their legal commitments.

• The Principal – the party needing the bond.
• The Obligee – the party requiring the bond.
• The Surety – the party providing the bond.

If the principal fails to meet the defined terms, the obligee has the potential to make a claim against the bond for losses.

What is the Purpose?

Surety bonds can be required by private companies, individuals, or even government agencies as they offer financial assurance that a commitment will be fulfilled. These bonds are often used in these situations –

• Construction Projects.
• Licensing & Permit Requirements.
• Court Proceedings.
• Public Contracts.
• Business Operations.

Types of Surety Bonds

Here is a partial list of available surety bonds; each serves a specific purpose-

Contract Surety Bonds

These types are typical in the construction industry and ensure that construction firms fulfill their contractual obligations.

License & Permit Bonds

Government agencies require these as a condition for obtaining licenses.

Court Bonds

Court bonds are often required in legal proceedings to offer financial assurance.

Commercial Bonds

These bonds are used in various business operations to protect against potential fraud/dishonesty.  

Contact a Leading Surety Bond Provider Today

For more information about available Alabama surety bonds, contact the licensed professionals at Surety Ins Inc. today – we are happy to help!