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What’s a Bond?

What’s a Bond?

What is a Bond? 

A surety bond is a legally binding contract agreement, willingly entered into by three parties, for the purpose of providing a measure of protection for the customer involved in the agreement. While all three parties benefit in some way by the bond, the most obvious benefit is provided to the hiring company, or obligee in this tri-party arrangement.

[NFP Surety can assist you with all kinds of surety bonds, in all states!  Call us today and learn whats a bond!  Apply in minutes and we’ll get you properly bonded as soon as possible.  Got to our state pages, or specific bond type pages, to learn more!]

The contractor providing the professional service in the agreement is legally known as the principal, and this party actually purchases the bond. The benefit to the principal in being bonded is that his services become more attractive, compared to rivals who may not be bonded. Any contractor who is bonded in offering professional services, provides customers with the assurance that work will be done in a satisfactory manner, and if not, those customers have recourse to making a claim against the bond, so as to be compensated for money already paid to the contractor.

whats a bond
What’s A Bond?

The third party in the contractual agreement is a surety company, which in this scenario acts as a kind of insurance company, because it must pay out the money when an obligee makes a claim against the surety bond. Still, there is a benefit to the surety company, because it does sell the bond to a principal for a price which is usually in the neighborhood of 10% of the face value of the bond, and in the vast majority of cases, no claims are ever made against the bond, so the surety does not have to make good on the claim amount.   [We only bond with top-rated bonding carriers such as Western National, Hanover, and Liberty Mutual.  Call us today to learn how easy our application process is!   Whats a bond? You’re going to love our bonding process…we’re sure of it!]

What is a bondWhats a Bond

How do surety bonds work? 

Surety bonds work as a kind of protection or insurance for the customer (obligee) who has hired a contractor to do some kind of professional work. Since the contractor (principal) must live up to the terms specified in the bond, generally relating to quality workmanship and completion of all stipulated tasks, the customer can be reasonably sure of receiving professional service value for the fee paid.  {Call us today, and learn what’s a bond?  We’ll gladly show your how easy getting bonded can be.  Bad credit bonding solutions available as well.}

Even if the contractor were to abandon the work before it was completed, the customer who hired the contractor is not left holding the bag, since he would be entitled to make a claim against the bond. Any amount less than or equal to the face value of the bond can be claimed, as long as the obligee can justify that amount in terms of how much he would stand to lose by not having the work completed.

This in fact, provides a powerful incentive for the contractor to live up to the terms of the agreement, because any contractor who has a claim made against his bond, may find future employment more difficult to come by. In the event of a claim filed by the obligee, the contractor would also be required to reimburse the surety company for the dollar amount it was forced to pay out on the claim.

[NFP Surety is the industry leader in All types of bonds.  Whether you need a bid bond, tax bond, court bond, mortgage broker, Freight, DMEPOS, or dealer bond, we have the bonding solutions for you.  Contact us today and learn whats a bond, and how to get bonded!]

Why Should you get Bonded? 

Getting bonded as a professional can help your business immensely, and that’s why many contractors do go to the trouble of becoming bonded. When customers know that a professional is bonded, they can be somewhat assured of not losing money on any hiring agreement they might reach with a professional offering services to the public.

Contractors who are not bonded cannot offer the same kind of guarantee of quality workmanship and completion of work, because there is no financial backing of that work, as there would be in a bonded scenario. As a professional, bonding becomes your promise to a customer that you will live up to their expectations for quality work and service, and customers understand that if you don’t follow through on that promise, they can take action to be compensated for it.  What is a bond?  We hope this helps you understand them better!

How can Bonding Help People?

As previously mentioned, bonding helps a professional attract more customers by virtue of the built-in guarantee of professionalism it provides to potential clients. Bonding can also be very helpful to those clients who happen to run into a contractor who is not conscientious about giving good service, and living up to the terms agreed to. In such cases, the client would not lose the money invested in paying the contractor for services, because a claim could be made against the bond to recover that money.

For instance, a homeowner who had paid thousands of dollars to a contractor for renovations, would not lose all that money if the contractor were to abandon the work halfway through. By making a claim against the bond for an amount equal to the unfulfilled services, there would be no losses suffered, and the claim money could be used to hire a more trustworthy contractor.

Whats a Bond? – Explained by experts.  We write our bonds with top-notch rated carriers, such as Suretec, Philadelphia surety, Old Republic, Cap Specialty, and more!  Let us do the shopping for you, and we’ll teach you how to get bonded!  You can also learn about bonds, from the Balance.  Or call NFP Surety at (800) 863-3210.

Industries Which Require Bonding

While almost every industry in this country makes use of bonding as a guarantee of professional workmanship, there are two specific industries where it is more prevalent than in all the others. Government organizations often make bonding part of their required procedure for hiring contractors because they are obliged to account to taxpayers for all funding spent on projects, so some kind of certainty is necessary.

For the same reason, the construction industry makes extensive use of bonding, because there are so many different contractors and subcontractors involved in the completion of any major construction project. Without an assurance of quality workmanship, and of completed work tasks, it is doubtful if any major construction job would ever be completed in a satisfactory manner, and on time.  What’s a bond…it protect you!

Bonding experts since 1984.  Whatever kind of bond you need, we can help!   Freight Broker, Construction, Car Dealer, Title, Court, Payment and Performance, or Adjuster, we have the means to get you properly bonded.  Call us today, or fill out our easy, online application.  We’ll get you bonded as soon as possible!  We know you have a choice, so thank you for considering NFP Surety!

whats a bond

NFP Surety

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