Fidelity and Surety Bonds
Individuals and businesses may need bonds to guarantee performance of a particular job or event. A bond is generally undertaken by a third party promising to pay if contractual obligations are not fulfilled. Bonds are generally divided into two types: Fidelity and Surety bonds.
Fidelity bonds are issued as a guarantee against loss due to employee dishonesty. Surety bonds are issued to cover a wide range of actions and situations, and are between three parties: 1.) a principal, or the entity who might cause the loss, 2.) the Obligee, the entity that collects under the conditions of the bond, should the principal cause a loss, and, 3.) the Surety, or the entity that pays the loss, such as the insurance company.