A surety bond is often a misunderstood legally binding contract. Your purpose for contacting surety bond companies Minneapolis MN to get one depends on your professional or personal reasons for needing one. They are part credit and part insurance with guarantees of fulfilling obligations when needed.
A Sure Definition Everyone Understands
Essentially, a surety bond is an insurance policy that is required by an obligee, which is the party requiring the bond. Usually, the obligee is a government agency requiring the bond to protect the government and citizens. If obligations are not met, the agency can file a claim
The person obtaining the bond is called the principal who is required to abide by the terms of the bond. Not doing so is what can lead to a claim.
How to Obtain a Surety Bond
The first step in obtaining a surety bond is determining which one you need. Thousands of bond requirements exist. Purchasing the wrong one will lead to it being rejected by the obligee.
For example, a specific contract, such as jobs over $100,000, requires a contractor bond. A surety bond that is not for a specific contract falls under one of several categories:
- Court bond – required by a court
- Fidelity bond – insurance for your business
- License/Misc. bond – required, but not for a specific contract
Benefits to Having a Surety Bond
Surety bond companies Minneapolis MN making a guarantee on your behalf is usually a better option. You do not have to part with liquid cash to get what you need done.
Credit can be extended through the surety with only your signature as collateral. Going to the bank for the same amount of credit means your house is used as collateral.
Unless you want to become a bond expert, it might be difficult to know what your surety bond guarantees. The good news is you do not have to be an expert. An agent at the surety bond company you choose can explain the specifics.
Since there are thousands of different bond requirements, it is not reasonable to expect them to memorize each one. However, as a service to you, they will research and give you a firm solution.