Following the protocols set up by professionals the whole process is about as revolutionary as cutting your toe nails. Read these links to demystify the process. The following is from the Primer on Surety Law.
"Suretyship has been practiced for at least 5,000 years and is one of the oldest
societal and commercial relationships. More than 1,000 years before the birth of Christ,
King Solomon admonished: “he that is surety for a stranger shall smart for it.”1
A surety bond is a three-party contract in which the surety guarantees that
the principal/obligor will perform its obligations to a third party, the obligee. Under a
performance or payment bond, the principal is a construction contractor, and the surety
guarantees that the contractor will complete the work and pay its obligations, and often
the obligations of its subcontractors. The contractor, however, remains primarily liable,
as the surety is a guarantor and is entitled to indemnity from the contractor for any
payment.
In a case of a contract awarded by a state department of transportation (DOT) to
build and repair roads, for example, the winning contractor is required by law to procure
a bond for the protection of the state DOT, and the contractors’ subcontractors and
suppliers. The principal in this example is the contractor who is awarded the contract, the
obligee is the state DOT, and the surety is the entity that issued the payment bond or
performance bond to guarantee the contractor’s performance and payment to the
principal.
The same relationship exists in private contracts. Where a private owner desires
to construct a building, awards the contract for construction of the building to a
contractor, and requires the contractor to procure a performance bond and payment bond,
the contractor is the principal under the performance and payment bonds, the obligee
under the performance and payment bonds is the owner, and the surety is the entity which
issues the bonds together with the principal.
In the government contract context, performance bonds are required to ensure
that the contractor completes the project for the governmental entity and the payment
bonds are designed to provide protection to the subcontractors and suppliers of the
contractor in the event that it fails to make payment. Bonds are used in private
contracting context for similar reasons.
1 Proverbs 11:15.
Insurance Policies vs. Surety Bonds---A Comparison
Surety is insurance but it is a unique form of insurance. An insurance policy shifts
the risk of loss to the insurer. The insurer is primarily obligated to pay any valid claim,
and it has no recourse against the insured to recover its loss. The insurer handles the
claim and pays with its own money. Under a surety bond, on the other hand, the surety is
entitled to indemnity from the principal and pays with the principal's money. The
principal, therefore, has a vital interest in resolution of the claim.
In a claim situation, the principal may insist that the surety should not pay the
claim. Upon investigation, the surety often finds that there is a legitimate dispute
between the principal and the claimant. If the surety pays the claim over the principal's
objection, it effectively forecloses the principal's opportunity to assert its side of the
dispute with the claimant.
Insurance policies are typically contracts of adhesion drafted by the insurer.
Bonds are typically drafted or selected by the obligee. The one-sided contract and
unequal bargaining power often encountered in insurance claims simply does not exist in
the context of surety bonds. As the party requiring the bond and mandating the form it
will take, the obligee can include whatever rights it wants, including attorneys’ fees or
deadlines for payment of claims. Of course, if the obligee makes the terms too onerous,
the principal and surety can refuse to provide the bond. Bonds are commercial contracts
bargained for between commercial entities well able to protect themselves."
We are now working up step by step instructions for writing your local demand for bonding from candidates running in your Congressional District. This will be up in one week along with suggested list of demands.
Companies which supply bonds in all 50 states
Construction Services Insurance
Southern California Insurance Broker
Pinnacle Surety & Insurance Services
