Our Products
Contract Surety
Surety is an age-old form of legal contract and has a well-documented history in commercial and personal transactions around the world.
A surety bond is a three-party agreement by which the surety binds itself to discharge the contracted obligations of a principal to an obligee in the event that the principal fails to fulfill such obligations.
The construction industry is the major user of contract surety bonds. They are required on most government projects and are frequently specified in the private and institutional sectors.
Contract surety bonds, through the surety company’s strength and rigorous pre-qualification procedures, provide security to owners, sub-contractors and others that a contractor will transform plans and specifications into a timely, successful and complete project.
In the construction industry, the surety is usually referred to as the bonding company or surety company. The obligee is usually the owner but also may be a general contractor or a major sub-trade contractor. The principal is usually a contractor.
Surety Vs. Insurance
A surety bond is a three-party agreement among a surety, and obligee, and a principal, whereas insurance is a two-party agreement between an insurer and an insured.
The price for a surety bond is calculated as a fee for a prequalification service and is related to the type and dollar value of the contract being guaranteed, whereas insurance policy premiums are based on the insurance company's statistical data which show that it will incur a certain number of claims for losses during the term of the policies.
In the event that a surety company is required to pay claims arising from a bond, the surety will expect to be fully reimbursed by the principal for such payment, whereas no such expectation or requirement exists when an insurer pays claims for insured losses.
Surety Vs. Bank
| Benefits : Owners / Contractors |
Surety
|
Bank
|
| Prequalification Process |
YES
|
NO
|
| Continuous Project Monitoring |
YES
|
NO
|
| Security for Subtrades / Suppliers |
YES
|
NO
|
| Full Financial Protection |
YES
|
NO
|
| Required to Investigate Complaints |
YES
|
NO
|
| Problem Solving Alternatives | ||
| Financial Assistance |
YES
|
NO
|
| Assume Construction Responsibility |
YES
|
NO
|
| Tender Offer to a Completing Contractor |
YES
|
NO
|
