SO JUST EXACTLY HOW DOES A SURETY BOND WORK?
Surety bonds are an insurance policy for the obligee or the entity that is initiating the project. In most situations, the obligee is a government agency, and the bond is in place to ensure the government is protected. Surety bonds operate as a form of insurance to the obligee, since the obligee is the beneficiary that can file a claim if the bond’s obligation is not met.
This is the entity, often times a government agency, that is requiring the bond
This is the contractor or subcontractor that needs to get bonded
This is a third party bonding company that provides and backs the bonds