(quiet guitar music)
-: A contractor's goal is to do the work
their client requires.
You have to follow a contract in order
to complete the work appropriately.
If you don't, it could cost you and your client money.
So most clients will require contractors
to carry surety bonds.
A bond is basically a guarantee that the client
won't lose out just because you cannot complete your work.
It's like an insurance policy between you and your clients.
So let's take a minute to understand your role
in a bond deal.
You the contractor, carry the bond.
You become the bond's principal.
You will buy it from a surety company.
You're probably going to have to get a certain bond
for the value and type of work you're doing.
Your client becomes the bond's obligee.
They are the party that you promise to pay back
in case you cannot complete your work.
If you cannot honor your contract,
the obligee can contact the surety company.
They will file a claim
for any monetary losses they experience.
Usually the surety company will pay the client
for their losses.
But that doesn't mean the principal is off the hook.
You promise to repay the surety company
for the funds they issue to the client.
Therefore, you will still have to pay your own money
in the event of a claim.
It can be hard to understand what you have to do
when getting or paying a bond.
So for more information,
talk to one of our professional agents today.