YOU ASK:
What is the definition of Surety Bond?
WE ANSWER:
A Surety Bond is an agreement among the principal, the obligee and the surety, where the obligee is protected in case there is a default in the payments. The surety will be the one to pay the obligee when the principal fails to perform his part of the deal.
For instance, in the case of a customer hiring a contractor to build a house, a surety bond is established. The contractor, under the contract, agrees to complete the house based on the specifications and building plan approved by the customer. In the event that the contractor fails to perform and to complete the house according to specifications, the surety will ensure that the work is carried out, or will pay for the loss.
Was this insurance question and its answer useful?
| Not a bit | Very useful |
Have an Insurance Question? Ask For Insurance
More insurance terms around surety bond:
- Surplus
- Surplus Lines
- Surrender Charge
- Surrender Cost Comparison Index
- Swaps
- Tax Sheltered Annuity (TSA)
- Tax-Deferred Basis
- Ten-Day Free Look Provision
- Term Certain Annuity
- Term Life Insurance
- Supplemental Coverage
- Superfund
- Suicide Exclusion Provision
- Substandard Risk Class
- Substandard Premium Rates
- Subrogation
- Structured Settlement
- Straight Life Annuity
- Stock Insurance Company
- Statutory Accounting Principles (SAP)