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Surety Bond Information
Surety Bonds in Arkansas
Surety bonds can provide financial assurances that a contract will be fulfilled. Regardless of your industry, you may benefit from being bonded if you are a contractor. Surety bonds may build trust with your clients, and they may be required in some cases.
The team at Sunstar Insurance of Arkansas can discuss how it may be advantageous to secure bond coverage. Contact us today for more information.
What Is a Surety Bond?
A surety bond is part of consumer protection, as it helps provide financial assurances that a contract will be satisfied according to the agreed-upon terms. Being bonded may help attract clients as some projects may require bond coverage before work may begin. Clients may also be more willing to enter into contracts with bonded businesses because of the provided financial protections.
Surety bonds are an agreement between three parties:
The principal is the party carrying the bond (e.g., the contractor).
The obligee is the party that benefits from the bond (e.g., the client).
The surety is the entity that underwrites the bond (e.g., the bonding company).
If the principal does not uphold its promises to the obligee, the obligee may file a claim against the bond. The surety may then provide compensation to the obligee. Following this, the surety may seek reimbursement from the principal for these expenses.
What Are Types of Surety Bonds?
There are several types of surety bonds. Three common examples include:
Bid bond—This provides assurances that a contractor will complete a job in accordance with the terms of the submitted bid.
Performance bond—This provides assurances that the contractor will satisfactorily meet obligations listed in the contract.
Payment bond—This provides assurances that the subcontractors and material suppliers will be paid.
Several other types of surety bonds may be available and different projects may require specific bond coverages.
Consult with the professionals at Sunstar Insurance of Arkansas for more information regarding surety bonds. We can help you secure the appropriate coverages for your needs. Call us today at 501-225-3454 for more information.