Surety Bonds

Clients and customers expect the businesses they work with to be reliable and consistent with their word. However, this may not always be possible, as extenuating circumstances may render companies unable to meet initial expectations. Surety bonds emerge as a potentially critical investment, providing financial security and peace of mind for parties entered into formal agreements.

What Is a Surety Bond?

Surety bonds are loss control tools often used or required by a business’s clients to establish recourse if company fails to fulfill its contractual obligations. These arrangements typically consist of an agreement among the following trio of parties:

• Principal—This party, such as a business or contractor, is tasked with purchasing bonds if the obligee deems them necessary.
• Obligee—This party, such as a client or project owner, determines if surety bonds are needed to secure their financial interests.
• Surety—This party, such as an insurance company, underwrites and maintains the bonds purchased by the principal.

If duties are reneged on, purchased surety bonds can compensate the obligee for their losses, at which point the surety can pursue reimbursement from the principal.

How Much Do Surety Bonds Cost?

Various criteria of a principal may influence the cost of surety bonds, including the following:

• Industry
• Location
• Credit scores
• Type of bond
• Bond amount

Learn More

At Drivers Insurance LLC, we are committed to helping businesses protect their financial interests. Contact us today to learn more about your options or to get a surety bonds quote.