With so many kinds of bonds out there, it can be difficult to differentiate between them. Surety bonds are a way of ensuring that the oblige is able to file a claim if the promise entrusted in the bond is not met.
Before we get too in-depth, let's talk about the parties involved in surety bonds.
First, there’s the oblige. This person is the one that requires the bond. The oblige is likely part of the government and is working to ensure that financial loss doesn’t happen across a number of industries.
Next, there is the principal. The principal is the one that needs the bond and will purchase one to guarantee future work performance success.
Lastly, there is the surety. The surety is the insurance company that is behind the bond, and if the principal fails to provide the work contracted, they will provide a full line of credit.
So let’s say you’re the owner of a plaza in your town. You’re the oblige. You’ve hired a contracting company (the principal) to add four more buildings to your plaza, and they’re contracted to finish the job by early next year. They begin getting lazy about the job and neglect to complete it in the time frame they promised.
This means that you, the oblige, can now make a claim since the principal didn’t finish the task they were contracted to do. The claim, if it’s valid, will go through the insurance company, who will pay for losses incurred by the work that wasn’t completed.
If you want to have financial peace of mind, a surety bond can surely help.
At Larsen Flynn Insurance, Inc., we’ve helped to provide many clients with the information they need to purchase a surety bond and do so confidently.
We’re an independently owned and locally operated insurance agency, and we’re located in Silverton. We’d love to talk with you about the opportunity to ease your mind with a surety bond.
Please feel free to call us today at 503-873-8631 to speak with a representative or to schedule a time to meet with us. We look forward to helping you find the right coverage!