General Surety Bonds Information from Tim Scott's blog

If you are unsure about what bonding is, you can find our guide to surety bonds here. If you need help understanding the different types of surety bonds, you can find that information here as well. If after reading those posts, you still have remaining questions about whether or not a contractor license bond is right for your business, please do not hesitate to contact us to discuss your situation! A surety bond is a contract between two parties: the principal, who is the contractor or service provider, and the obligee, which is usually a government entity. In essence, you are promising to pay if you do not hold up your end of the bargain. This agreement helps ensure that the public interest, which is represented by the obligee group, is protected from potential losses by the principal.

While it is true that there are rules and regulations enforced by state or local authorities that make the posting of this bond a necessity, believe it or not, this serves to your benefit. In a nutshell, bonds are issued for the protection of all entities involved. Once you post the bond, which is only required after a thorough review of your operations, you can rest assured knowing that if something should go wrong, you will be able to claim compensation from the surety. There are many types of surety bonds. A license bond is one of them, and represents the surety's commitment to oversee an applicant's financial performance in their industry. If the applicant defaults on their business agreements (i.e. not paying suppliers or employees), the surety will reimburse them for the debt, or penal sum amount that was set when the bond was issued. For more detail, please refer to the info-graphic below.