A surety bond is basically a contract between three individuals or groups including the principal, the obligee and surety. The principal is the person who purchases the surety bond and enters into a contract with the obligee. The obligee is protected by the bond. The surety is the person or company who issues the bond. This arrangement can give the obligee confidence in knowing that the principal will keep his or her promises as defined in the contract.
There are many benefits to having a surety bond for all the parties involved. For the principal a great benefit is that instead of having to put up a large amount of money as a guarantee that you will fulfill your promises or in the event that you make a mistake in your work, you can purchase a bond that will fulfill this requirement for a lot less. Many people feel more confident in hiring a professional who is bonded. This can help you market yourself successfully.
Keep in mind that a surety bond is not the same as insurance. As the principal, you are still required to meet the promises in the contract. If you break the terms of the agreement or make a mistake in the work you may still have to pay the fee to the obligee. The surety bond just ensures that you will abide by the agreed upon terms stated in the contract. Click here to learn more.