Secret 82: Who's On First? Learn Surety Bonding Terms

The world of surety bonding may seem mysterious and complex. Let's face it, it's not like insurance. It's actually more similar to banking. No wonder the subject is not well understood by the very people who need to know. In this article we will cover some of the basics such as who the parties are and what they do so the subject does not seem so foreign. Who is the "insured"? The insured is the party buying insurance. Therefore, in bonding there is no insured, instead there is a "principal." This is the party whose actions the bond concerns. If your construction company needs a bond, it is the principal, the bond applicant. The intermediary who assists you with your bonding need may be a bond producer, a bonding agent, or an insurance agent. In every case, the person is licensed by the state to process surety bond transactions. The firm the agent works for is called an insurance agency or bonding agency. This entity provides the channel between the principal (bond applicant) and the surety, the bonding company, the provider of the bond and party holding the risk. In the world of bonding, the term "company" is used to describe the bonding company. The agent and the agency would not be referred to as "the company" even if the name of the firm was the ABC Local Insurance Company Inc. If you need any kind of information on this article related topic click here: grading bonds