{"id":339,"date":"2017-11-01T09:55:53","date_gmt":"2017-11-01T09:55:53","guid":{"rendered":"http:\/\/www.performancesuretybonds.com\/blog\/?p=339"},"modified":"2022-01-24T16:04:48","modified_gmt":"2022-01-24T16:04:48","slug":"types-of-surety-bond-collateral","status":"publish","type":"post","link":"https:\/\/www.performancesuretybonds.com\/blog\/types-of-surety-bond-collateral\/","title":{"rendered":"Types of Surety Bond Collateral"},"content":{"rendered":"

\"surety<\/p>\n

Surety bond applications generally only require a business to submit an application form, supporting documentation, and the premium amount in order for the bond to be underwritten. However, there are some circumstances where a surety may require the applicant to provide a form of collateral<\/a> to secure the bond. This generally occurs when a surety bond deems that the risk of issuing the bond is too great without the additional protection of collateral.<\/p>\n

How does collateral help protect the surety company?<\/h2>\n

Basically, a surety will use the collateral provided by the bond applicant, known as the bond principal, as a source of money to cover expenses should there be a claim made against the bond that the principal fails to repay the surety for. If a surety bond requires that an applicant provide collateral they will generally issue a collateral agreement that outlines how and when the surety may use that collateral. This helps reduce the amount of money a surety can lose by providing a source of finance to cover the expenses.<\/p>\n

Acceptable types of collateral<\/h2>\n

A surety will only accept certain types of collateral to mitigate the risk of issuing the bond. Most sureties will require one of the following types of collateral:<\/p>\n