The obligee is the entity that requires the bond. Obligees are typically government agencies working to regulate industries and reduce the likelihood of financial loss. The surety is the insurance company that backs the bond. The surety provides a line of credit in case the principal fails to fulfill the task.
Why is a bond important?
A surety bond provides financial security and construction assurance on building and construction projects by assuring project owners that contractors will perform the work and pay their subcontractors, laborers, and material suppliers. In other words, a surety bond is a risk transfer mechanism where one party guarantees to another that a third party will perform a contract.
How do i qualify for a bond?
Each bonding company will set guidelines for qualification and many bonding companies have varied methods of determining if you qualify. Most of all, they agree that the applicant must be reputable and have a good record of performance. After all, a surety bond is a guarantee of performance! If a surety is willing to back up a contractor, they must be certain that the risk is minimal. The underwriters’ primary mission is to provide a guarantee of reliable service. The evaluation from any bonding company consists of four components: financial stability, integrity, longevity and capacity, which we will further discuss.
What Does it cost?
Rates depend on multiple factors, including obligees’ risk preferences, applicants’ credit ratings and the type of bond required. For license and permit bonds, applicants with strong personal credit usually pay annual premium between 1% and 3% of the total bond amount. Applicants with higher personal risk or applying in higher-risk markets typically pay between 5% and 15%.
i don't have great credit. can i still get bonded?
Yes you can. Ask us about instant issue Small Bonds if your credit is sub 660.
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