What Are Surety Bonds

1. What Are Surety Bonds What Are Surety Bonds A surety bond is a guarantee agreement that is issued by an entity or an organization on behalf of another party, where the entity provides guarantee that the obligations created by the second party to a third party will be fulfilled by the entity, in the event, the second party fails to fulfill them. The entity is known as the guarantor and the second party is named as the principal. Third party can be an obligee that's protected by the bond and is the beneficiary of the obligation.

2. Surety bonds have been in existence from a long time. Hundreds of years ago, these bonds had been used as a way of encouraging long distance trading. The first corporate surety firm in america was established in the year 1880 and is recognized as the United States Fidelity and Casualty Organization of NY. Relating to an estimate provided by the Surety and Fidelity Association of America, approximately $3.5 billion is paid annually towards the US surety premiums. There are two important categories in these bonds that include contract bonds and commercial bonds. Contract bonds provide assurance on the terms and conditions in a specific contract. Some examples of agreement surety bonds include performance, payment, bid, supply. A few examples of commercial bonds consist of beer bonds, license, permit bonds and union bonds. Surety bonds are highly popular in the building sector where these bonds are used by contractors in order to obtain the contract to construct a project. Usually, an insurance company acts as a guarantor and takes the place of the contractor. In case, the contractor defaults with the task or is unable to complete, the guarantor methods in to take necessary corrective action so as to get the project finished. The insurance company might also be compelled to pay for the damages resulting due to default. 805bail.com provides 24/7 Bail Bonds Santa Barbara Ca. We also specialize in providing Bail Bonds in various cities in Ventura County, Santa Barbara County. To know more about Bail Bonds Santa Maria and Lompoc Bail Bonds. Contact us today!