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What is a Bond? |
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What is a Bond? |
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What is a Surety Bond? A surety bond is a three party legal agreement wherein the bond guarantees that one party (principal) will complete its obligation to the second party. In essence, the bonding company is a co-signer. Individuals and businesses must qualify for bonds. There are personal and business guarantees (indemnifications) to the surety company, guaranteeing that if there is money paid out by the surety on the principal's behalf the surety must be reimbursed. Bonds are the opposite of insurance in that theoretically a surety expects no losses. If you are in the market for a surety bond, chances are this is a cumbersome task. N.S.B.A., Inc. is here to assist you with all your bonding needs. Our surety company is equipped to assist you in securing the bonds you need to conduct your personal and business affairs. |
Why are these bonds required and who requires them? Licenses or permits are required when the public interest demands that certain types of business or activities be regulated for the protection of citizens, or of public and private property. Bonds guarantee that a business granted with a license or permit by a governmental entity will comply with all its laws, rules and regulations. The statutes and ordinances on bonds vary from state to state and from city to city. Information on bonds required in your city can often be obtained from the city clerk's office. On this bond the Principal and the Surety are firmly bound unto the Obligee for a specified amount and specified term. For your convenience, N.S.B.A has an immense bond form library. The 4 C's in Surety All bonds are essentially credit instruments and therefore underwritten like a bank loan. The qualifications for the bond are character, capacity, continuity and capital. At N.S.B.A., Inc. we look at the applicant by conducting our investigation of each individual owner or primary stockholder over 5% , their business background, experience, financial strength and credit history. The specific bond obligation and statutes of the requiring state are also analyzed.
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