What is a Surety Bond?
Suretyship is a three-party agreement between a Principal (contractor, public official, fiduciary, notary ) a Surety (CNA Surety) and an Obligee (governmental body, owner ). Using a written Bond agreement, the surety, CNA, agrees to guarantee the commitments of the principal to the obligee. Commitments may be to perform a service or to comply with or required by statute, regulation, code or other agreement/ obligation to complete the contract. The bond is a credit relationship – it is NOT an insurance policy.
There are many instances where a surety bond is required. Usually when the public has a vested interest or tax dollars are being used to fund the project. For example; a contractor awarded a project, or if required by law to have a license or permit to conduct business, they will likely require a bond. Newly Elected officials need a bond to guarantee that they will faithfully perform the duties of the office. Litigation proceedings often require a bond, as do court appointments of a fiduciary to handle affairs of another person.