Understanding Surety Bonds in Angleton, TX

At Brazoria County Bail Bonds, we handle a variety of bail bond transactions. One type of bond we occasionally offer is a surety bond. When discussing surety bonds in Angleton, TX, it’s very important to have a basic understanding of what a surety bond is and how it works.

A surety bond represents a contractual agreement between three separate parties. The three parties are the principal, the surety and the obligee. The principal is the person or party obligated to fill the terms of a contract. Typically the principal will be an individual or a business. The obligee is the person or party for whom the principal is required to perform a specific obligation. Obligees are often government agencies tasked with regulating industries with the goal of reducing financial risk.

Meanwhile, the surety—an insurance company—is responsible for guaranteeing to the obligee that the principal will act to fulfill the terms of the contract. If the principal fails to do so, the surety will fulfill the principal’s end of the bargain for the obligee. The principal is then on the hook to the surety for the amount of the original claim, plus interest.

What does a surety bond do?

In essence, a surety bond provides a guarantee that the principal both understands and intends to abide by the requirements of a contract. A violation of the contract, in the form of a late payment, fraud or any kind of misrepresentation, means the principal may have a claim filed against them by the obligee. If the principal isn’t able to resolve that claim, either through payment or through other measures, the surety will have to pay the claim.

Not surprisingly, it’s in the best interest of a principal to avoid having claims brought by the obligee. Whether the claim is ultimately valid or not, the principal must take measures to settle it. If the principal is unable to settle and the claim is valid, the surety has to step in. The principal is obligated under the terms of the original bond to repay the surety.

Unfortunately, when the surety winds up having to pay a claim, no matter how quickly the principal is able to reimburse them, the claim can come back to haunt the principal if they need to become bonded in the future. A bond application can be denied outright merely on the basis of the principal having a paid surety claim on their record.

Who needs a surety bond?

Surety bonds can be necessary in a variety of circumstances, and there are many different types of surety bonds for different occasions. Prior to receiving a business license, for example, many people will need license and permit bonds. In order to work on government and publicly funded projects, construction companies will need contract bonds. Even business owners can buy business service bonds as a safeguard for their clients in the event of theft by employees.

Often times, a person won’t understand surety bonds until they’ve been informed they need to purchase one. If it turns out you need to buy surety bonds in Angleton, TX, contact Brazoria County Bail Bonds right away to begin the process.

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