Who are Involved in the Making of a Surety Bond?
If you are looking to get a surety bond, one of the most important things you need to know is this: who are the parties involved in a surety bond? Most people think that getting a surety bond is like getting insurance where all you need to do is approach an insurance company and find the right policy for you. This is not true.When getting a surety bond, there are always three parties involved: the principal, the surety and the obligee. The principal is the person required to get the surety bond, which means this person or party will need to perform the duties as stated in the bond.The obligee is the party requesting for a surety bond so that he/they will be assured of the principal’s fulfillment of his duties. This party wants to be assured that if the principal fails in his account, they will be properly compensated.The surety is the company that prepares, underwrites and releases the bond, therefore providing a guarantee. This company assures the obligee that for instances where the principal fails to properly perform his obligations as stated in the bond, they will pay the obligee for the damages.Once the underwriting has been completed, the principal shall then pay the surety company for underwriting fees. The surety bond shall be in the possession of the obligee.
