Many people that are required to obtain a surety bond have never heard of them. In fact, 1 out of 5 calls I receive are from a client who do not even pronounce the word surety correctly. A common question from our clients is, “Why do I need a surety bond?”.
The obvious answer is because the obligee is requiring it of you in order to do business with them. The real question is, why is the obligee requiring the bond of you? If you are in need of a commercial bond then it is not in place to cover you (the principal), but anyone you will be doing business with. Contract bonds are in place to guarantee the work will be completed per the terms of the contract. Court bonds are required for a variety of different reasons. For instance guardianship bonds are required by the court to assure the guardian will act in the best interests of the minor/incapacitated person. Other court bonds such as appeal bonds are required to ensure the defendant will not flee if found guilty.
There are numerous reasons as to why bonds are required. The best way to find out why your bond is required is to actually read a blank copy of the bond and find out exactly what it is guaranteeing. Each bond form is specific, above is only a generalization of what a bond guarantees.
If you have any questions on your specific bond type, please post a comment and I will be glad to help you better understanding of why you are required to obtain your bond.