What is a Surety Bond?
Surety bonds are designed to guarantee performance in the face of a set of particular risks. Each surety bond must be uniquely tailored to meet specific needs.
A surety bond is an agreement under which one party, the surety, guarantees to another party, the obligee, the performance of an obligation by a third party, the principal.
The most common types of surety are:
Contract Surety Bonds
Contract Surety Bonds are bonds that the government or an owner of a construction project may require a contractor to obtain. There are three types of contract surety bonds:
- Bid bond – Affords protection to a project owner (obligee) in the event a successful bidder will not enter a contract and will not provide the required surety bonds or other security
- Performance bond – Provides protection to the obligee if the contractor defaults on its obligations under the bonded contract
- Payment bond – Guarantees that the contractor will pay subcontractor, labor and material bills associated with the construction project.
Find out more about different Surety Bonds here…………….https://www.travelers.com/surety-bond/what-is-a-surety-bond.