Indemnity Bond

An indemnity bond assures the holder of the bond, that he or she will be duly compensated or reimbursed in the case of a possible loss incurred.

This bond is an agreement that protects the lender from loss, if the borrower defaults on a loan and is a legally binding contract. If the principal fails to fulfill the contractual obligations (agreed upon by the obligee and the principal), the principal pays up to the full bond amount (including legal costs). If a person fails to pay the agreed upon amount, then his or her corporate and personal assets will be used to pay them. This bond is non-negotiable, and, if not signed, the surety bond will not be approved.

An indemnity bond gives the legal right to collect from the principal any amount that the surety has paid out in a claimed situation. As per the agreement, it also requires that the company pay a premium. For example, if the surety company must pay another contractor to complete the project, the surety company will make a demand on the contractor, under the indemnity agreement, that he or she pay for this expense. The surety company can sue the contractor if he or she fails to do so.

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Understanding an indemnity bond is very important. If not understood properly, there are certain damaging consequences that may occur. If a bond claim is not paid, it will ruin the reputation of the company, which may result in colleagues and future clients viewing the company as incompetent and unprofessional. Not paying claims on a bond can also lead to bankruptcy and legal action, depending on the size of the bond claims.

Most people have a basic understanding about surety bonds, but few have complete and vast knowledge about them. There are dozens of surety bonds that guarantee a wide variety of obligations, and understanding what a bond guarantees, simply by reading the bond form, can seem overwhelming. As professional surety bond service experts, we provide detailed knowledge about the surety bond and suggest what is best for you.

There can be various reasons where an indemnity bond is required, such as in the construction industry, when buying a home, company or shares or when dealing with government indemnity schemes. It is important to include in this list a contractor’s license bonds as well. This is a legal protection for three parties: The contractor, the company, and the state bond issuing agency. By getting a contractor license bond, it helps to ensure that projects progress professionally and ethically.

Despite the fact that a contractor often has years of experience, it is always good to err on the safer side. It only takes one mistake for a claim to occur. For complete peace of mind, buy bonds that will cover any allegations, in the case that you have made a mistake (such as a professional indemnity bond).

If you are looking for contractor indemnity bond services in New York or nationwide, we would be more than happy to serve you. Our experts are always here to help. What makes us stand out from the crowd are a wide range of services which include personal service, professional advocacy through our tactical financial process, the largest number of solid underwriters and carrier relationships, integrity, honesty and commitment to our clients.

Get your free contractor indemnity bonds quote in New York, Massachusetts and other major parts in the US by using our bond application form.

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