-What is a surety bond
A surety bond is simplest form as a written agreement to guarantee compliance, payment, or performance of an act. It involves a three-party agreement between the:
- Principal – the party that purchases the bond and undertakes an obligation to perform an act as promised.
- Surety – the insurance company or surety company that promises to perform, should the principal fail to render services resulting in a contractual liability loss.
- Obligee – the party who requires, and often receives the benefit of— the surety bond. For most surety bonds, the obligee is a local, state or federal government organization.