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Understanding the purpose and relevance of a surety bond can sometimes be challenging. Most of us have heard the term but we still don’t quite understand it.
The simplest definition of a surety bond is that it represents insurance for the party requiring the bond, also known as an obligee. It can also be defined as a guarantee made by an insurance carrier, that is a hybrid of insurance and credit.
The next step in understanding the importance of a surety bond is getting to know how it works. If you are required to acquire a surety bond, by a government or any third party, it is important to keep in mind that you are expected to abide by the terms of the bond, and to avoid possible claims. By making regular payments and fulfilling your obligations towards the surety which is providing your bond, you are protecting not just your corporate, but your personal assets as well.
Choosing the right surety bond is vital, if you purchase a wrong one, it will most definitely be rejected by the oblige. The following infographic not only explains the role of a surety bond in detail but also offers a quick and easy way for choosing the right surety bond for your business.
Infographic Source: http://www.jwsuretybonds.com/info/videos/general/what-are-surety-bonds.htm
Tags Bond Surety Understanding
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I’ve recently been hearing a lot about surety bonds and I had no idea what they were, so I wanted to do some research. I’m glad that you talked about what surety bonds are, and defined them simply as an insurance policy for whoever got the bond. I’m going to have to see when I would need to look into getting surety bonds, or hiring someone who has secured them for themselves! Thanks for the info!
Max,
I agree. They did a really good job of explaining things well. Info-graphics always help to bring the point home.
Thanks for sharing this infographic. Understanding surety bonds can be difficult at first, but once the practicality of it is laid out well, it’s easy to see why they’re necessary. Beyond that, it’s also very important to figure out exactly what type of bond you’ll be needing for your particular situation.