What Is a Surety Bond?

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What Is a Surety Bond?

Surety bonds are financial guarantees put in place to ensure that obligations are fulfilled to the agreed upon terms. This can include a contract being completed to a certain time frame or standard of quality. If these obligations are not met then a surety bond ensures that there are funds in place to help complete the contract. 

Surety bonds are used throughout many industries, but are most frequently used within the construction industry. 

Who Is Involved?

A surety bond is a triparty agreement involving the following parties:

1. The Principal

The person or entity completing the contract. The principal must meet the terms of the contract.

2. The Obligee

The person or entity who is guaranteeing themself that the principal will meet the obligations of the contract.

3. The Surety / Obligor

The entity providing the financial guarantee to the obligee that the principal will fulfill their obligations.

Types of Surety Bonds

Although there are standard types of surety bonds to suit a range of industries, each of our bonds is assessed bespokely to make sure that it suits all of your needs. 

The types of bonds we can offer:

 

Advance Payment GuaranteeDuty DefermentReinstatement Bonds
Bailiff BondLandfill BondsRemediation Bond
Completion GuaranteeMaterials SupplyRent Deposit Guarantee
Construction GuaranteePayment BondRent Guarantee
Contract GuaranteePayment GuaranteeRestoration Guarantee
Deferred Payment GuaranteePension BondRetention Bonds
Deposit ProtectionPerformance BondRoad Bonds
Development BondPurchase GuaranteeSewer / Water Bond
Warranty Bond

When Do I Need a Surety Bond?

The simple answer to this is that a surety bond may be required by the obligee as a condition of a contract with the principal. They help to bring another level of protection for those who may be affected by the contract.

For example, a local council will require a bond for a road project to make sure that the public are protected and have quality roads to use. The surety is vouching that the terms of the contract will be fufilled, and if they are not then a claim can be made against the bond to help make sure the requirments are met.

How Long Does a Surety Bond Last For?

Every bond has an expiry date and the length of a surety bond will depend on the duration of the obligations which are being guaranteed.  This is known as the surety bond term. However, once this expiration is reached a surety bond can be renewed or extended for example if a project overruns. This is not always the case and will depend on the type of bond and the terms attached to it. If the bond is to be renewed or extended then the risks will have to be assessed again.

Application Process

We keep our bond application as simple as possible. However there is certain information you will need to provide in order to help us assess your bond requirement. 

1) We will ask you to fill out 3 forms to provide the full details of the project and your company history. There is one for your general company information, an application for the details of the contact and one for your bank information.

2) We will speak to our panel of insurers to get you the best price and cover possible.

3) Our team will present to you your options and get you the right cover in place.

If you would like more information then please contact bonds@alternativeinsurancebrokers.co.uk and our team will get back to you shortly.

Get a Quote

To get a quote for your surety bond there are many factors that we need to access. The forms below will help you to provide all these details, such as your company financial information and history and the details of the project. 

Please download and complete all the forms below and send them to bonds@alternativeinsurancebrokers.co.uk.

General Information Form

Application Form

Bank Information Form

If you have any questions that you would like answered before proceeding with a quote then please contact our team using the form below and they will get back to you shortly.

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