Surety Companies and Surety Bond Companies

2007-03-08 10:33:40

( Financial )



A surety is a person who agrees to pay for someone’s debt or obligation. Sureties are normally needed when a person is unable to meet their obligation as a result of their delinquency. Surety companies function in the same way as a surety and often represent surety companies.

Surety bond companies may issue surety bonds. A surety bond is a written agreement between the principle, who is the person that owes the money; the obligee who is owed the money; and, the surety company who guarantees the payment. When the principle defaults in his payment, the surety settles his debt. The principle must pay for the expenses and losses incurred as a result of handling the principle’s case, aside from the reimbursement of the amount due to the obligee.

There are bonds which are issued for contract purposes, when there are costs and specifications involved in a certain construction project. The surety insures that the contract is fulfilled financially. Another type of bond will promise a court that the principle will appear before the court at the requested date. Should the principle not appear, the surety company pays for the fine and collects this from the principle. Mortgage surety bonds guarantees that the brokers will follow the broker licensure code. There are many other types of bonds that can be issued by a surety company, and it is best that you approach them for more information.

When being issued any type of bonds, it is recommended that you check for its authenticity right after they are issued to you. You may seek the assistance of your local state insurance department or call the surety company directly. It may take several days before the information on your bond is entered into the data processing network of the surety company or is reported to their head office. In order to check whether your bonds are authentic, information on your bond number if available, the name and address of the principle, name and address of the obligee, date the bond was executed, amounts of the bond payment and performance bond, the contract price, name of the person who signed for the bond for surety are need to be provided when making an inquiry.


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