How to Get Bonded
A
surety bond is a three party contract that guarantees the customer (or obligee)
that the principal (or obligor) will fulfill all the terms of their contract.
If the obligor does not fulfill the terms, the surety (e.g. bank, insurance
company or bonding company) will compensate the obligee (and then recover the
amount from the obligor).
Many
customers prefer hiring a company that's bonded because bonding offers them
protection in case the company doesn't keep up its end of the deal. For
example, if a contractor doesn't finish the renovations he promised, the
customer can make a claim with the surety. Failure to adhere to the contract
may result in forfeiture of the contractor's license .When applying for a bond,
you (i.e. the obligor) will need to provide the following information to the
bonding agency:
- Name
- Address
- Birthday
- Social security number
- Your spouse's information (if you're married)
- The information for anyone who owns more than 5 percent of the company
- Business name
- Business address
- A financial statement from your business
- Personal financial statements from every owner with more than a 5 percent stake in the company.
The
obligor will also have to pay the bonding agency an annual premium. The obligee
must provide the following information:
- Name
- Address
- Type of bond
- Amount the bond is for
- A bond form spelling out the requirements of the bond.
Additional
information may be requested depending on the type of bond you're applying
for.The obligee must provide a bond form spelling out the requirements of the
bond. These bond forms differ depending on what state you live in and what type
of bond you need. The forms can be obtained from the bond agency or from the
state's Web site.
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