Bond Coverage

What you need to know about surety bonds

A surety bond is a written agreement to guarantee compliance, payment, or performance of a duty. Surety bonds are different than insurance policies because they involve a three-party agreement. The three parties in a surety agreement are:

  • Principal: the company or person who purchases the bond and undertakes the obligation to perform an act as promised.
  • Surety: the insurance company or surety company that guarantees the principal’s obligation will be performed. If the principal fails to perform the act as promised, the surety is contractually liable for any resulting losses.
  • Obligee: the party who requires and receives the benefit of the surety bond. For most surety bonds, the obligee is a government organization or a company who does business with the principal.

What does a surety bond cover?

Unlike most insurance policies, surety bonds do not provide coverage to the owner of the bond, like an insurance policy provides coverage to the owner of a policy.  A surety bond is typically written to protect, indemnify, or provide a financial guarantee to a third party (the obligee).  Obligees are commonly customers, suppliers, or government entities.

How do bond claims work?

If the obligee is damaged financially by the principal’s violation of the bond terms, then a claim may be filed against the bond. The claim is then investigated by the insurance/surety company and the obligee.  If it is a valid claim, the insurance/surety company is liable for damages up to the full amount of the bond. The insurance/surety company typically requires indemnification from the principal, in order to be reimbursed for paying the claim to the obligee.

Why do I need a bond?

Typically, you will be told by the obligee (a government representative or someone with whom you do business) that you need a bond in order to proceed with your work or other responsibilities.  There are thousands of different types of bonds and the bond’s purpose will be different depending on which industry, license, permit, court, or other requirement that you are trying to fulfill.

Why should I use Click2bind for my bond needs?

We know that fulfilling your bond needs is critical for you to obtain work and comply with regulatory matters. We have the resources and expertise to provide tailored bond solutions specific to your needs, on both local and national levels. We partner with major insurance companies as well as specialty surety companies to ensure favorable rates, quick turnaround time, and excellent service.

Our offerings include, but are not limited to:

  • Contract Bonds (Bid / Performance / Payment)
  • ERISA Bonds
  • Fidelity and Employee Dishonesty Bonds
  • Generic and Miscellaneous Bonds
  • Notary Bonds
  • Public Official Bonds
  • State Regulatory (License) Bonds
  • Workers Compensation Bonds

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