Call Us 570-344-0211 ☰ ˟
a sign in the dark
Call Us 570-344-0211
  • Our Agency
    • AboutImage of right arrow
      • Our Staff
      • Our Locations
    • Get A Quote
    • Our Providers
    • Contact UsImage of right arrow
      • Bartal Insurance
  • Products
    • Coverage for Specific IndustriesImage of right arrow
      • Accounting Firm Insurance
      • Alarm Contractors Insurance
      • Insurance for Arborists
      • Builders Risk Insurance
      • Cleaning Business Insurance
      • Construction Insurance
      • Consulting Firm Insurance
      • Contractors Insurance
      • Specialty Trade Contractors Insurance
      • Craft Brewery Insurance
      • Dump Truck Insurance
      • Educational Facility Insurance
      • Financial Institution Insurance
      • Food Truck Insurance
      • Handyman Insurance
      • Garage Insurance
      • Healthcare Facility Insurance
      • Healthcare Practice Insurance
      • Law Firm Insurance
      • Life Science Insurance
      • Limousine Services Insurance
      • Liquor Liability Insurance
      • Livestock Insurance
      • Maintenance Contractors Insurance
      • Manufacturing Insurance
      • Marijuana Insurance
      • Maritime Employers Insurance
      • Media & Advertising Insurance
      • Orthotics & Prosthetics Insurance
      • Personal Trainer Insurance
      • Pool & Spa Insurance
      • Printers & Publishers Insurance
      • Railroad Contractors Insurance
      • Real Estate Businesses Insurance
      • Retail Insurance
      • School Bus Contractors Insurance
      • Scrap Metal Insurance
      • Security Guards Insurance
      • Self-Storage Insurance
      • Septic Contractors Insurance
      • Snow Plow Insurance
      • Specialized Truck Equipment Insurance
      • Technology Services Insurance
      • Tow Trucks Insurance
      • Water Well Drillers Insurance
    • Coverage for Your BusinessImage of right arrow
      • Bonds
      • Business Owners Policy (BOP)
      • Commercial Auto Insurance
      • Commercial General Liability
      • Commercial Property Insurance
      • Commercial Real Estate Insurance
      • Commercial Umbrella Insurance
      • Crime Insurance
      • Errors and Omissions Insurance
      • Fidelity Bonds
      • Leave Management
      • Loss Control Insurance
      • Inland Marine Insurance
      • Marine Insurance
      • Mechanical Breakdown Insurance
      • Office Insurance
      • Product Liability Insurance
      • Professional Liability
      • Small Business Insurance
      • Small Business Liability Insurance
      • Surety Bonds
      • Technology Insurance
      • Trailer Insurance
      • Trucking Insurance and Semi Truck Insurance
      • Workers Compensation
    • Coverage for Your EmployeesImage of right arrow
      • Small Business Retirement Plans
      • Employer-Sponsored Retirement
      • Group Benefits
      • Group Disability Insurance
      • Voluntary Benefits
      • Retiree Health Coverage
      • Group Health Insurance
      • Disability Insurance
      • Individual Life Insurance
    • Auto InsuranceImage of right arrow
      • Classic Car
      • Medical Payments Coverage
      • Minor Violation Forgiveness
      • Personal Injury Protection
      • Rental Reimbursement
      • Uninsured & Underinsured Motorist
    • Home InsuranceImage of right arrow
      • Homeowners Liability
      • Landlords Insurance
      • Mortgage Protection
      • Scheduled Property Insurance
    • Life InsuranceImage of right arrow
      • Group Life
      • Individual Life
      • Disability Insurance
      • Second-To-Die Policy
    • Powersports VehiclesImage of right arrow
      • ATV Insurance
      • Boat Insurance
      • Motorcycle Insurance
      • Snowmobile Insurance
    • Personal Umbrella & Identity Theft
  • Contact Us
    • Bartal Insurance
    • Location & Hours
    • Get A Quote
Home > Blog > The Roles of Surety Bond Principals
MONDAY, DECEMBER 6, 2021

The Roles of Surety Bond Principals

If you have to get a surety bond, you are the bond’s principal. By providing the bond, you’ll be able to guarantee clients that you can meet their contractual obligations. Still, just getting a bond isn’t enough. You have to complete a few requirements and stipulations to keep the bond in good standing. Surety bonding is an ongoing process. Every contractor should know their roles in the deals. Here is a little more information. 
Paper with Surety Bond on a table
Who is the Principal 
Surety bonds involve a few different parties.

First, there are the principals. These are the businesses, contractors or entities that buy the bonds. The bonds are financial guarantees to others. Should the principal renege on the stipulations of a contract, they might have to provide another party with compensation. Because they didn’t follow the rules of the contract, the principal might cause their clients financial losses. The bond can help them make up for those losses. 

Other parties in the deals are obligees and sureties. Obligees are your clients who have contracts with you. Many obligees will require surety bonding of anyone they hire for a job. The bond will help them know that if something goes wrong, the principal can compensate them.  

The surety is the financial agency that manages a surety bond. It is something like an insurance company. Obligees will make their claims to the surety company. Then, the surety or the principal will have to compensate the obligee for their losses. So, what are the requirements of the principal in the meantime? 

Step 1: Maintain the Bond 
If you have to carry a surety bond, then it is your requirement to keep the bond active. In many cases, contracts will explicitly state that you must carry a bond of a certain value. If you don’t maintain proof of the bond, you could breach the contract. To maintain the bond, you’ll have to pay a premium on it. 

Step 2: Provide Proof of Bonding 
You’ll usually have to provide proof of the bond to your client. That proof should include the agreed on financial limits of the bond. It should also include instructions on how to file a claim on the bond for compensation. 

Step 3: Understand Your Compensation Obligation 
A bond is not like an insurance policy. It doesn’t provide a financial settlement. Instead, it guarantees one. The bond says that you, the principal, will repay the client for their losses. The bond will not offer a payout in place of you paying. Rather, it will simply say that you will pay the client if you break the contract. In many cases, you will pay the client directly for their losses. In other cases, the surety company will issue payment to the obligee. Then, you will have to repay the surety company. 

Posted 4:07 PM

Tags: bonds
Share |


No Comments


Post a Comment
Required
Required (Not Displayed)
Required


All comments are moderated and stripped of HTML.

NOTICE: This blog and website are made available by the publisher for educational and informational purposes only. It is not be used as a substitute for competent insurance, legal, or tax advice from a licensed professional in your state. By using this blog site you understand that there is no broker client relationship between you and the blog and website publisher.
Blog Archive
  • 2022
  • 2021

  • auto insurance(3)
  • business owners policy(2)
  • builders risk insurance(1)
  • policy(1)
  • professional liability insurance(1)
  • coverage(1)
  • loss(1)
  • homeowners(1)
  • home insurance(1)
  • bonds(1)
  • life insurance(1)
  • business insurance(1)
  • bop(1)
  • law firm(1)
  • homeowners insurance(1)
  • general liability(1)
  • commercial auto insurance(1)
  • flood insurance(1)
  • insurance(1)
  • classic car insurance(1)
  • claims(1)

View Mobile Version
Carrier
Carrier
Carrier
Carrier
Carrier
Carrier
Carrier
Carrier
Carrier
Carrier
Carrier
Carrier
Carrier
Carrier
Carrier
Carrier
Home| Get A Quote| Blog| About Us| Contact
433 Green Ridge Street | Scranton, PA 18509
P: 570-344-0211 | F: 570-344-9583
Social
logo, company name

Powered by Insurance Website Builder