Surety bonds have been around for a very long time, but some people still don’t understand them. A surety bond is an agreement between the person who promises to pay a debt and the party that insures the loan. The person promising to pay doesn’t actually promise anything. Instead, he or she puts up collateral and offers financial security against being sued. Surety bonds provide protection against costly, time-consuming lawsuits by giving collateral to the lender if something goes wrong.
What is a Surety Bond?
Surety bonds are like insurance policies used in other fields. A surety can be seen as a way to get professional benefits without paying a premium (and at no cost). In fact, most companies require their employees to carry insurance while they’re working with other people’s money in order to avoid legal repercussions.
How Surety Bonds Are Used
Surety bonds are common with small loans like home improvement projects or business start-up costs. Also, these bonds are often issued for biologics to protect manufacturers from lawsuits related to product recalls or safety issues. Bail bonds Scranton PA are another example of surety bonds, which gives incarcerated people more time out of jail so they can work, attend to personal needs and prepare a legal strategy. On top of this, surety bonds are beneficial when it comes to government contracts and projects.
When there’s a large cost, a surety bond can protect people from problems down the line. It’s a good idea to use a surety bond when dealing with any type of high-value transaction that involves the principal or agent. However, despite the many benefits of this type of insurance, it should not be taken lightly. If a person considers using a surety bond, he or she should consult with an attorney before signing any agreements.