Surety Bonds
We can help you get that surety bond you need. And we can make that happen FAST. Sackrison Insurance can protect you and your customer from the unexpected. Before you start, and before you hammer the first nail – call us to get that surety bond you need. We’ll make it easy. We promise. Call us today at (707) 931-0186.
What is a Surety Bond?
A surety bond is not insurance. What you say? Then why can an insurance agent in Napa, CA help me purchase it? I thought insurance agents only sold insurance. Well, yes, but a surety bond in California is similar to insurance in one way – it’s a promise to pay someone a certain amount of money if something bad happens. And the “bad” thing that can happen is that someone who promised to do something for someone else (in a contract of course) didn’t deliver what was promised.
A surety bond uses certain terms to explain this “promise to deliver” relationship. They are:
The Principal – that’s you, the person or business that made a promise to:
The Obligee – that’s your customer, who is counting on you to deliver on that promise.
Let’s see how a Surety Bond works in the real world:
Let’s say you are a contractor specializing in custom decks. You are hired by a homeowner to build the most beautiful deck. Your customer has a deadline for this deck to be completed, because she is hosting a huge get together, and her family and friends are flying in from around the country to attend. The deck must be done before everyone shows up on a certain date. You sign a contract to complete the deck by this date. Then, (hypothetically) you get in a major car accident, and you are laid up in the hospital, unable to complete the deck on time. The homeowner needs to hire someone else to complete the work that you promised to complete by a certain date. She’s not angry at you (after all, you *did* just have a car accident), but she still needs her deck completed before her daughter and son-in-law have landed next Friday.
With a surety bond, she will still get her deck built in time. This type of surety bond is known as a Performance Bond.
You may need a different type of surety bond, such as a Commercial Bond, Contract Bond, Fidelity Bond, Errors & Omissions, International Bond or a Customs Bond. You may even need a “Bid Bond” that essentially will keep frivolous bidders away from the “real bidders” on a construction project.
A surety bond uses certain terms to explain this “promise to deliver” relationship. They are:
The Principal – that’s you, the person or business that made a promise to:
The Obligee – that’s your customer, who is counting on you to deliver on that promise.
Let’s see how a Surety Bond works in the real world:
Let’s say you are a contractor specializing in custom decks. You are hired by a homeowner to build the most beautiful deck. Your customer has a deadline for this deck to be completed, because she is hosting a huge get together, and her family and friends are flying in from around the country to attend. The deck must be done before everyone shows up on a certain date. You sign a contract to complete the deck by this date. Then, (hypothetically) you get in a major car accident, and you are laid up in the hospital, unable to complete the deck on time. The homeowner needs to hire someone else to complete the work that you promised to complete by a certain date. She’s not angry at you (after all, you *did* just have a car accident), but she still needs her deck completed before her daughter and son-in-law have landed next Friday.
With a surety bond, she will still get her deck built in time. This type of surety bond is known as a Performance Bond.
You may need a different type of surety bond, such as a Commercial Bond, Contract Bond, Fidelity Bond, Errors & Omissions, International Bond or a Customs Bond. You may even need a “Bid Bond” that essentially will keep frivolous bidders away from the “real bidders” on a construction project.
"A surety bond ensures contract completion in the event of contractor default. A project owner (called an obligee) seeks a contractor (called a principal) to fulfill a contract. The contractor obtains a surety bond from a surety company. If the contractor defaults, the surety company is obligated to find another contractor to complete the contract or compensate the project owner for the financial loss incurred." ~Courtesy Small Business Administration