Surety Bonds, Required for Some Types of Jobs

August 4, 2009

A surety bond, such as an MVD bond, is a guarantee. What is being guaranteed depends on what is written on the bond. Surety bonds are a form of credit not insurance. The surety is the insuring party. The obligee is the party for whom the work is being done and the principal will be performing the contractual obligation.

Today to complete a project for the federal, state or local governments surety bonds are required. They are issued on employees in jewelry stores to make sure they do no abscond with the diamonds. Cleaning services have their employees bonded which is also a form of surety bond.

The concept of surety bonds can take many names. Their tradition goes back hundreds of years at least. An example of a type of bond of this nature is the king of a country getting a recommendation from a nobleman on a new young worker. The nobleman will make a guarantee to the king in a form of a bond, should the job not be done or done incorrectly.

The surety company is like a co-signer on a loan, therefore, the surety company is careful who it insures. Naturally, there is an interest rate charged on the surety bond.

Surety Bonds & The Guarantee To Pay

How To Qualify For A Higher Surety Bond

Are surety bonds used in the construction industry?

Changes In The Surety Bond Market

Filed Under Business Tips, Finances