Frequently asked questions

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SURETY BOND: An agreement providing for monetary compensation should there be a failure to perform specified acts within a stated period. Generally speaking, it is an agreement whereby one party, called the surety, obligates itself to a second party, called the obligee, to answer for the default of a third party, called the principal.
Insurance: a form of risk management. It is a two-party contract between the insured and the insurance company. This contract (insurance policy) assumes a guaranteed promise that the insured will be compensated by the insurance company in the case of a covered loss.

Surety bond: a contract among at least 3 parties. It is issued by one party (the surety) on behalf of a second party (the principal). This contract guarantees that the second party will complete an obligation to a third party (obligee). If the obligation is not met, the third party can recover its losses from that bond up to the bond limit.
A surety bond is somewhat like a professional co-signer. The surety company is basically promising the agency requiring the bond that you will follow the rules listed on the bond and will not cause financial harm.

The bond is NOT to protect you; the bond is in place to protect the public from you.

If you do not follow the obligations stated on the bond then a claim can be filed on your bond. The surety company will investigate and pay if they find you at fault.

Unlike insurance, if the surety company pays on the bond, you are obligated to pay the surety company back.

Surety Bonds Explained
A surety bond is a type of protection usually required by state, local or federal government agencies. The purpose of a bond is to provide a form of protection for either the general public or groups or individuals specifically stated.

A surety bond is not insurance, although often grouped with and referred to as an insurance product. Instead it is a three party agreement. The parties are as follows:
  • The Principal—the primary person or business entity that will be performing a contractual obligation, seeking licensure, or performing a role or duties in accordance with the obligee's expectations.
  • The Obligee—the party who is the recipient of the obligation (usually a government entity).
  • The Surety—who ensures (guarantees) that the Principal's obligations will be performed. Sureties are similar to (sometimes divisions of) insurance companies.
A mobile/manufactured home dealer surety bond is often a requirement of mobile/manufactured home dealers. The mobile/manufactured home dealer surety bond ensures that persons or entities engaged in selling mobile/manufactured homes comply with written contracts and state statutes regulating the industry. This requirement varies by state and may or may not apply to your business depending upon where it is located.
License and permit surety bonds are types of commercial surety bonds which are normally required by states and municipalities in order to obtain a license in a given industry. They seek to ensure that a licensed entity or business will perform its work according to a specific state statute or statutes which govern or regulate an industry. Most businesses will have to obtain a license and permit surety bond at some point during their existence. There are literally thousands of different types of license and permit surety bonds but we've listed the most common types of these surety bonds on the glossary page.

License bonds guarantee the Principal will comply with applicable codes and regulations established by the Obligee (the Obligee is usually a government entity such as a city, town or state). Permit bonds grant a privilege.

The requirements of the bond and ordinance must be understood before the bond is written. The agent may ask you to obtain a copy of the ordinance or law that specifies the requirements and a copy of the bond, if the Obligee has its own.
Losses are not expected so surety bonds are issued only to qualified individuals or businesses whose projects require a guarantee. A surety bond is a form of credit, so the Principal is responsible to pay any claims.

It is always a good idea to contact or refer to the respective state agency for rules, regulations, and compliance requirements.
We believe in providing a FAST, easy-to-use surety bond service that provides as broad a bond selection as possible.
  1. Immediate issue—most bonds approved in seconds
  2. No wait for paper through the mail
  3. Ability to print forms online
  4. Savings—fees are waived
As little as $100 to $200 for a $10,000 bond limit, will vary for higher limits.

Note: The cost is dependent on the type of bond. Some bonds only require an application and the cost is between 1-5%. However, some bond types do require a credit check in which case the cost will vary depending on the state, bond type, and credit.

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BA Surety Bonds

We are a division of Barrett & Associates, an independent insurance agency. We have been writing bonds since 1994.

We represent a number of bonding companies that offer a wide range of products that can meet your licensing requirements .

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