Some information about surety bonds

1. About Surety Bonds

2. About Surety Bonds
• A surety bond is a particular type of bond that involves three different
parties. These are the principal (the entity being secured against default), the
obligee (the entity who has the rights to the money or service owed), and the
surety (the entity promising to shoulder the liability in case the principal
defaults.
• There is a wide range of circumstances or situations where this type of bond
can be used. Basically, a surety bond is used every time a group or an
individual is expected to perform something, and an additional assurance of
compliance is required.

3. How It Works
• The principal signs an agreement with a surety company (normally an insurance underwriter
or company like Swift Bonds) that makes a promise to reimburse the surety in case the
obligee defaults or fails to pay. In this case, the surety gives the obligee the agreed amount.
This then results to a legal obligation of the principal to reimburse the company. This may
include all expenses and losses incurred by the surety in relation to the case.
• Since the insurer is a lender, it acquires the same rights in recovering its losses from the
principal like what any lender has; and this is unlike a typical insurance transaction where an
insurance company has significantly less options as far as legal recourse is concerned.

4. Types of Surety Bonds
• There are many types of this bond including court bonds,
contract bonds, license bonds, and bail bonds. Swiftbonds does
not write any bail bonds. We focus solely on bonds for
contractors.

5. Types of Surety Bonds
• Contract bonds - required of a contractor who is obliged to do a particular
building or maintenance job. The contract may stipulate various
specifications, timeframe for completion, and maximum cost, the surety may
be required to appropriately fulfill the contract.

6. Types of Surety Bonds
• Court bonds - usually court-required prior to a principal's attempts to file an
injunction or claim, or an appeal. If the principal fails, they may be required
by the court to shoulder the court costs or even a fine in case of wrongful
filing.

7. Types of Surety Bonds
• Bail bonds - This is one of the most popular types of surety bond, although
one that a lot of banks and insurance companies want nothing to do with
primarily because of its notoriously high default rate. This basically requires
the principal's appearance at a set court date, and usually costs higher since
only a few specialists are willing to issue such a bond.

8. Types of Surety Bonds
• License bonds - usually required for start up businesses or when acquiring a
new kind of license for an already existing business. In this case, the
principal is the owner getting a surety for compliance with all the licensing
requirements. The local government or the state is the obligee issuing the
license, and gets paid in case the principal does not act in accordance with
the licensing requirements.

9. Types of Surety Bonds
• There are other types of surety bonds other than those mentioned above.
These include permit bonds (similar to license bonds), public official bonds
(to make sure that the elected or appointed official will act lawfully), and
probate bonds (for executors handling the assets of a minor or an estate).