A Surety Bond is a basic term that describes a bond. Surety bonds are underwritten differently than insurance even though they are sometimes mistaken for insurance, when in fact surety bonds are different.

A Surety Bond is essentially a guarantee. What exactly the bond guarantees depends on what language is written in the bond. With surety bonds there are always 3 parties involved.

The 3 parties involved are:

• The Principal – the primary business entity who will be performing a  contractual obligation.
• The Oblige – the party who is the recipient of the obligation.
• The Surety – who ensures, guarantees the principal’s obligations will be performed. Sureties are similar to insurance companies.

This agreement says that the Surety agrees to uphold – for the benefit of the oblige – the contractual obligations made by the principal, if the principal shall fail to uphold their agreement with the oblige.  Often consumers require a bond before they will agree to enter a contract with a contractor.

The 2 main categories of Surety Bonds:

• Contract Surety Bond
• Commercial Surety Bond

An Oregon Contract Surety Bond guarantees a specific contract. An Oregon Commercial Surety Bond guarantees the terms of the Bond form instead of a contract.

If you would like more information about bonds, please call a licensed professional at Ankeny Insurance Agency, Inc. at 541-957-7720