The bond business refers to providing surety bonds to individuals and companies. Surety bonds are a type of contract between three parties: the principal (the person or business who is required to obtain the bond), the obligee (the party who requires the bond), and the surety company (the party who issues the bond).
The bond business includes a wide range of different types of bonds, including:
- Contract bonds: These are bonds required for construction projects or other types of contracts.
- Commercial bonds: These are bonds required for businesses, such as license and permit bonds, fiduciary bonds, and official public bonds.
- Court bonds: These are bonds courts require, such as bail and appeal bonds.
- Fidelity bonds: These are bonds that protect businesses from employee theft or fraud.
Surety companies provide these bonds and charge a fee (known as a premium) for their services. The bonus is typically a percentage of the total bond amount and is based on the financial strength of the principal and the level of risk involved.