South Carolina has approximately 418,031 small business owners. If you own a company, you may need a business surety bond. These can be confusing if you're unsure how they are used.
Fortunately, an independent insurance agent can help with policy and rate options. They work with several carriers so that you get the best coverage for a fair price. Connect with a local expert for custom quotes.
What Is a Surety Bond?
In South Carolina, a surety bond is a contract between three different parties. The parties are the principal, the surety, and the obligee. They are explained in further detail below.
- Principal: The person or entity obtaining the bond
- Surety: The insurance company supplying the bond
- Obligee: The person or entity requesting the bond.
How it works: The surety financially guarantees to an obligee on behalf of the principal. The principal will act by the terms established in the bond. A surety bond can be used for a variety of things.
What Does a Surety Bond Cover?
In South Carolina, it's good to understand why your business might need a surety bond. It's less confusing if you break it down. Essentially, a surety bond exists to protect the obligee.
- Financial loss: Pays for financial loss if promised labor is not performed.
- Liability loss: Pays for liability in the event the work causes damage.
- Theft or fraud loss: Pays the obligee due to financial losses if one of your employees steals or commits fraudulent acts.
Surety bonds are usually required when you are under contract with another entity. Many companies or governments will mandate that you have a surety bond before hiring you for a job. This will protect their risk if a project is left incomplete or has losses.
How Much Does a Surety Bond Cost?
Similar to your other policies, like commercial auto or general liability, your premiums will vary. Carriers use personal data and outside factors when figuring your costs. Check out some items that will impact your South Carolina pricing.
- The size of the job
- Your experience level
- Your cash flow
- Your financial records
- Prior losses
- If you've ever had a bond before
- Your assets
In order to obtain a bond, the carriers will need proof of prior financials. The insurance companies will have to guarantee your completion to another entity. For them to be willing to do this, they will need to know that you can deliver on your promise.
Is a Surety Bond Insurance?
It's important to understand that your South Carolina surety bond is not the same as personal or commercial insurance. Surety bonds are actually a type of credit. It can be confusing because insurance companies sell them.
When it comes to a surety bond, the risk is always with the principal, not an insurance company or the surety. This is why it is considered credit. The principal is obligated to pay the bond back.
Types of Surety Bonds
In South Carolina, there are many different types of surety bonds. The amount and type of bond you'll need will depend on the project or contract. Here are a few common ones, but there are several more.
- Contract bonds
- Commercial bonds
- Auto dealer bonds
- Sales tax bonds
- Custom bonds
- Court bonds
- Fidelity bonds
When a contractor bids on a job, a contract bond is typically required. The most commonly asked for surety bonds are commercial or contract bonds. If you're bidding on a government project, they are especially needed.
What Is a Surety Bond for Jail?
In South Carolina, if you are awaiting trial and have a bail set, you don't have to remain in jail. As long as you can pay the bail amount, you are free to go. The issue you may run into is the funds needed.
A surety bond or bail bond can guarantee the money necessary to pay the bail. If your trial date is far off, this might be your way to freedom. It can be beneficial when you have to be detained for an extended period without it.
How to Get a Surety Bond
In South Carolina, you may need a surety bond for business or personal reasons. It can be a lifesaver when you're low on cash or have to guarantee work. If you're playing in the big league and bidding on larger jobs, a surety bond is usually necessary.
Fortunately, an independent insurance agent works with multiple carriers so that you get the best options. They can find coverage for a price that won't break the bank. Connect with a local expert on TrustedChoice.com in minutes.
TrustedChoice.com Article | Reviewed by Jeffrey Green
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