What is a surety company?
A surety company is an insurance carrier that provides surety bonds that are used as a guarantee that a business or individual will comply with obligations and requirement of an agreement. Many surety companies are divisions within an insurance group, but some may be a surety company providing only bonding services. Surety is most common in contracts in which one party questions whether the counter party in the contract will be able to fulfill the requirements.
A surety company will issue a surety bond and is responsible for paying the surety bond’s obligee in the case of a default by the surety bond principal. A surety obligation involves three parties; the Principal, the primary obligor; the Surety, the secondary obligor; and the Obligee.
Surety companies may work through licensed surety brokers or they may deal directly with the principal. Each surety bond company has a rating based on a rating system ranging from A++ to S. Many obligees will only accept bonds from A- or above rated surety company.
Some surety bond types are: performance, commercial, contract and court. Performance bonds are used to guarantee the performance of a contractual or regulatory obligation. Surety bonds used in commercial projects are usually required prior to obtaining a license. Contract bonds may be required for a government construction project to cover all phases of the project (e.g. bidding, construction & payment for materials & subcontractors). Court bonds are used in legal proceedings for such matters as securing a person’s appearance at a criminal trial (bail bond) and may be required for estate executors (fiduciary bonds).
A surety company provides a bond that guarantees the performance of an obligation by the principal to the benefit of the oblige. When a surety company writes a bond, the principal must comply with the terms of the bond and satisfactorily meet the obligations and requirements of the underlying agreement or regulation. A claim may be made by the oblige if the principal fails to perform as promised in the agreement, and the surety may be required to resolve the dispute by paying the claim to the obligee.
Continental Heritage Insurance Company has the experience and expertise to meet your surety needs. Since its founding in 1980, Continental Heritage Insurance Company has continually evolved to help enhance businesses operating in both established and groundbreaking markets. Continental Heritage specializes in underserved and hard to write markets. We have a reliable, dedicated, and responsive underwriting team that will work with you to ensure that you receive your surety bonds quickly. Contact us today through our website or email [email protected] to discuss how Continental Heritage can meet your surety needs.