For many industries, surety bonds can be a vital component for business growth and success
Surety bonds differ from the traditional lines of insurance coverage. An insurance policy is a two- party agreement based upon an occurrence (e.g. fire, flood, accident); a surety bond is a three-party agreement based upon a default. The three parties to a surety bond include the principal, the surety, and the obligee. The principal under a bond can be a construction contractor, developer, materials/equipment supplier, transportation company, or any firm or individual promising to fulfill an obligation to a third party (obligee). A surety company is typically an insurance carrier, but in some instances, a financial institution. The obligee can be the government, state, municipality, or any private entity requiring the coverage afforded by surety bonds.
Under a surety bond contract, the principal and the surety carrier provide a guarantee to the obligee to fulfill a confirmed obligation (e.g., performance of a contract, payment of an obligation, or compliance with a law). If the principal fails to fulfill its obligation – as guaranteed under the surety bond — the surety carrier is then required to fulfill the obligation with the surety, then seek indemnification from their bonded principal and any other indemnitors. As surety bond placements provide guarantee for both performance and/or payment of a financial obligation, the underwriting is viewed as a form of credit extension, heavily dependent upon an entity’s financial strength, as well as the history of the individual or entity seeking the bond.
Krauter & Company’s dedicated Surety team is composed of seasoned professionals, experienced in all types of industry and bonded obligations. Active in a variety of industry functions, Krauter Surety professionals represent many of the top regional and national surety bond carriers. Krauter & Company’s reputation and relationships creates additional accessibility to creative solutions for hard-to-place surety obligations.