Chatbug Karen

Have you ever made a transaction or a business deal that required a surety bond? A surety bond is, simply, a bond guaranteeing performance of a contract or obligation. It is like a loan that will be paid if you don’t stand behind a promise. A surety bond involves three parties. Those parties are the person who is required to obtain the bond, known as the principal. The second person is the person requiring the bond, known as the obligee and the surety, the carrier who backs the bond.

When I hear the word bond, it increases my pulse rate. The word bond makes me think of jail. LOL A surety bond is nothing like a bond to get out of jail. There are some misconceptions about surety bonds. One huge misconception that often frightens people out of transactions is that they pay for the bond in full when they apply for a bond. That is not the way it usually happens. Some higher risk cases do require a bond be paid in full in order to obtain it. Most will simply pay an annual premium which is a percentage of the total bond amount. Some think that just because they have never had a claim, they should get a better rate. Rates are not based on the amount of claims because if you ever have a claim, the chances are you will never get another bond.

Some are under the false impression that the rates on a surety bonds can change and thus may lower as the principal stays with the carrier for long periods of time. Unless the principal’s situation changes, the rate will not change. In rare circumstances the rate may go down but this is not the norm.

There are other misconceptions that need to be corrected. JW Bond Consultants, as an experienced Bond Agency, educates their clients so they can feel more confident with the process of obtaining a bond at very competitive rates. This allows the individual peace of mind because they understand the process the way it is meant to work and not the way they have heard it might work.