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A bond is an unusual form of insurance in that one person or organization pays for it, while another receives the benefit.
It’s easier to understand with an example. Imagine a contractor is building a new office building for a government agency. The agency naturally wants a guarantee that the taxpayer won’t be left out of pocket if the contractor fails to deliver the offices as promised.
The answer is a bond. The contractor pays a premium to an insurer to purchase the bond. The insurer then pays the necessary compensation to the agency if the contractor fails to deliver. The big difference between this and ordinary insurance is that the insurer can and will go after the contractor to get this money back. The point of the bond is that the agency gets the assurance that it won’t have to chase after the money itself.
While government agencies commonly insist on a bond, it can work with any two organizations. The one that purchases the bond is “the principal,” while the one that gets any payout is “the obligee.”
If there’s anything else you need to know about bonds, contact us today.
A surety bond is defined as a three-party agreement that legally binds together a principal who needs the bond, an obligee who requires the bond and a surety company that sells the bond. The bond guarantees the principal will act in accordance with certain laws.
There are many types of surety bonds, and each state has its own bonding requirements for different industries. However, there are three major types of surety bonds that you should know: license and permit bonds, construction and performance bonds, and court bonds.
We also offer the following types of bonds:
- Fidelity Bonds
- Public Official Bonds
- Judicial Bonds
- Fiduciary Bonds
- License and Permit Bonds
- Contract Bonds (Bid and Performance Bonds)
- Miscellaneous and Federal Bonds
- Notary Bonds
- Surety Bonds
- North Carolina Certificate of Title Bond
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As an independent agency, we offer multiple options at competitive prices.