What is a Surety Bond – And why does it Matter?

If you want to add credibility to your name in the market, then a Surety Bond is the only option that can work for you in this regard. Your surety bond will act as insurance for customers who are hiring your services, against any damage or loss of life caused by your callousness while carrying out your responsibilities as per the conditions agreed in the contract. So, a surety bond in reality works as a cover for customers availing your services, and if they find that you already have a surety bond in place, they are definitely going to feel more assured about your services, and they would have no hesitation in hiring your services for their jobs. As a matter of fact, you can also view surety bonds as the price for undertaking contractual work in the US. So if you want to carry out contractual work for people in US, the first and foremost requirement for you would be to buy a Surety Bond.

As far as the legal definition of a Surety Bond is concerned, it could be defined as a simple business agreement involving 3 parties, where the 1stparty involved in the agreement is the ‘Principal’ or the owner of the business; the second party involved is the ‘Surety’, which is also the monetary pledge; and the 3rd party is the ‘obligee’ or the government in this case, which makes sure that the owner of the business or the principal diligently discharges its obligations according to the conditions stated in the business agreement.

However, if you really want a Surety Bond to fulfill its purpose and give your customers a positive vibe about your business practices, it will also be of utmost importance that you take every possible precaution during your delivery to ensure that no clause of the surety bond is ever broken or violated even by mistake. Because if that happens, not only will you lose the money you have invested in buying the Surety Bond, but you will also lose your reputation in the market, which would be a much bigger lose than the Surety Bond amount.

So as a business owner, you should look at the Surety Bond as an asset, which not only gives you a good reputation in the market, but also limits your liabilities to the value of the Surety Bond in the event of an unforeseen disaster, which might stop you from fulfilling your conditions stated in the bond’s contract.