Appletree Insurance Blog
Bonding usually involves two parties for most people, the borrower and the lender, but there is a third party involved in some agreements: the surety party. This article will discuss what sureties are and what involves them in bonding and bond insurance.
How Bonds Work
A bond represents the agreement made by the contractor and the obligee. Companies normally utilize these to finance their programs and projects. Bond details usually include the fixed or variable interest of the payments and when the loan is due to be paid.
What Are Sureties?
These are legal, contractual agreements between three different parties to give a confidence boost that their work will be done according to the requirements and regulations presented by the issuer.
The first party is the bond's issuer, normally called the principal. They issue bonds usually for the safety of guaranteeing that the project they are working on would be finished within the given requirements.
The second party is the company that hires the obligee contractor in legal terms. The surety bond protects the customer from any fraud, abandonment, or malpractice done by the contractor.
The final party in this agreement is the surety company. They serve almost the same purpose as an insurance company. If the contractor fails to meet the standards of the obligee, the surety company pays the obligee for damages and poor performance. Afterward, they would seek repayment from the principal.
The Importance of Bonding
Getting bonded can be considered a form of employment for some. A hiring company sometimes would require a specific bond for participants before they start working. This is to give the company a guarantee that their work would be performed properly and on time, without any malpractices in the process.
Bonding insurance is important and might help you be assured for the long run. The relief that sureties give would help lessen worries for everyone involved in the agreement.
At Appletree Insurance, we do our best to make sure that our clients are well-protected with affordable and comprehensive policies. We make sure to go the extra mile to help you with your needs. To learn more about how we can help you, please contact our agency at (603) 881-9900 or Click Here to request a free quote. Any coverage discussed is not guaranteed. Contact us today to go over your specific needs and we are happy to help you find a policy that works for you and your budget!
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