WHAT is a bond?

Having a better understanding of basic bonding information will help you manage a more successful business.

Surety Bonds

Surety Bonds are a type of insurance policy that includes a 3-way contract among the following parties:

  • 1. You (the bonded party)
  • 2. The Obligee (the bondholder)
  • 3. The Obligor (the insurance company)

The amount of the bond is called the Principal. In the event of a default by You, repayment of the Principal amount is guaranteed to the Obligee (the bondholder) by the Obligor (the insurance company).

Fidelity Bonds

Fidelity Bonds cover policyholders for losses they incur because of fraudulent or dishonest acts of individuals. Common examples of Fidelity Bonds are:

  • 1. Employee Dishonesty Bonds
  • 2. ERISA Bonds
  • 3. Financial Institution Bonds