Surety bonds guarantee the performance or financial obligations of others. A simple definition is that a surety bond is a written agreement that usually provides for monetary compensation in case the principal fails to perform the acts promised.
Most large property and casualty insurance companies have surety departments. In addition, there are some companies for which surety bonds make up all or most of their business.
Surety bonds are issued through surety bond producers, also known as agents and brokers, who know the surety industry. Surety bond producers typically work in agencies that specialize in surety bonds or in insurance agencies that deal in insurance policies and surety bonds.
There are various types of surety bonds; some deal with business ventures like construction, while others are associated with motor vehicles. Some states allow a surety bond to be posted instead of maintaining auto insurance. You may also obtain bone insurance or a surety bond for the title of a vehicle.
This title bond guarantees to a motor vehicle department that the title to a vehicle is clear, as represented. If there is a claim, someone else has a lien or owns the vehicle, then the DMV will file against the bond. The surety would be required to pay the claim and seek your recovery.
If you have trouble finding someone to issue you a surety bond, contact your state’s insurance regulatory body for consumer help.
— Michelle Megna contributed to this story.
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