Bonds help protect your business from financial losses resulting from unfulfilled contracts and incomplete jobs. If a contract is broken, a surety bond requires compensation to be paid to the obligee.
At Acentria Insurance, we offer two primary types of surety bonds: commercial and construction bonds to meet the unique needs a business may be contracted to complete.
A surety bond, or sometimes referred to as a contract bond, is a three-party agreement that upholds a guaranteed adherence to a commercial contract. The three parties involved are the principal (bond purchaser), the surety (guarantees the obligation of the bond), and the obligee (receives the benefit of the bond).
Surety bond cost ranges, depending upon the type of bond and amount of coverage. Typically, premiums fall between 1-15% of the total surety bond amount and are also affected by the applicant’s credit score and financial history.
An indemnity agreement is a contract associated with a surety bond. By signing, you are legally obligated to pay any claims caused by you. You must enter into an indemnity agreement in order to purchase a surety bond.
No. However, your credit score will greatly affect your premium rate. Sometimes, co-signers may be used to lower a surety bond quote.
Yes; contract surety bonds require CPA financial statements.
Three parties work together on Surety Bonds: the principal, the surety and the obligee.
The principal is the entity that purchases the surety bond and completes the contracted work. It’s the principal’s responsibility to do a quality job in a timely manner, as agreed upon in the contract.
The surety issues the bond itself, providing a financial guarantee for completed work from the principal as set forth by the contract.
The obligee, who required the bond purchase from the principal, can make a claim for payment from the bond if the principal does not complete the work as contracted. The claim cannot exceed the amount of the bond.
In the event of a claim, the principal has to pay the amount to the surety.
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Our team of professional agents at Acentria are well-versed in both commercial and contract bonds – and ready to help you make a decision that’s smart for you and your business.