Bonds
What is a Bond
Bonds are a way of making a promise and showing that someone will vouch for you on that promise.
Let’s say you’re a contractor and you repair kitchens. When a customer asks “How do I know you will do a good job? How can I know I can trust you?” That’s when you show them the bond.
A bond is a promise that you will do what you will say you will do, but if not, money will be paid out for failing on that promise.
The contractor is known as the Principal or obligor.
The company who sells the bond to the contractor, and who will pay out if the contractor fails is known as the Guarantor or surety.
The customer whose kitchen is being repaired and will be paid the bond in the event the contractor fails in is known as Obligee or insured.
There are two types of bonds
that are asked about the most:
one is a Surety bond that guarantees the performance of someone like the contractor.
A Fidelity bond guarantees that a person is trustworthy.
Recommended: Gold
The GOLD Course is ALWAYS the recommended class series for all students as it teaches the material in more depth. Over 30 hours of the most in depth classes with a more intensive teaching of the topic. Learn more about P&C GOLD
Share the Post
Click to share the post to your network
