Surety Bonds

The term “surety bond” is used to describe many different types of bonds. Surety bonds are three party guarantees. The parties are:

• Principal - primary person or entity who will be performing a contractual obligation 
• Obligee - party who is the recipient of the obligation.
• Surety - ensures (guarantees) that the principal's obligations will be performed.  Sureties are similar to (sometimes divisions of) insurance companies.

Via this agreement, the surety agrees to uphold, for the benefaction of the obligee, the contractual obligations of the principal, if that principal fails to demonstrate its obligations to the obligee. A surety bond is provided so as to induce the obligee to contract with (or license) the principal. For example it demonstrates the credibility of the principal and/or guarantees performance and completion as per the terms of the agreement at question. The two primary categories of bond types are: contract bonds and commercial bonds. Contract bonds guarantee a specific contract. For example this includes bid, payment, performance, supply, maintenance as well as subdivision bonds. Commercial bonds guarantee as per the terms of the bond form used.

Contract surety bonds are commonly used in the construction industry. In order to obtain a contract, the GC (General Contractor) must provide the project owner (obligee) a bond for its performance as per the terms of the contract. Additionally, owners and contractors may provide payment bonds to ensure that subcontractors and/or suppliers are paid for work done and materials supplied. The Miller Act of 1935 states that payment and performance bonds are required for general contractors on U.S. federal government construction projects if the contract price is in excess of $100,000.00.

The principal, who can be either a contractor, license applicant, or permit applicant will pay a specific premium, which is generally paid annually in exchange for the surety's financial backing to extend its surety credit. If a claim is filed, the surety will usually investigate it in detail prior to payment. If it is determined to be a valid claim, the surety will pay the claim as required. The surety will then turn to the principal for reimbursement in the amount paid on the claim as well as any and all legal fees incurred in the process.

Viking Bond Service is a nationally licensed Surety Bond Agency. We have been handling all types and amounts of surety, contract surety, and fidelity bonds since our inception. Viking’s team of professionals have over one hundred years of combined experience in the surety industry. We provide surety bonding through all major United States surety companies using A-Rated, and Treasury Listed surety paper. Viking offers approvals for nearly one hundred percent of the bond requests that we receive. We also have programs available for most clients who would not qualify for standard surety markets due to credit. Our aim is providing our clients with friendly, honest, and efficient service.