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(quiet guitar music)

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<v ->A contractor's goal is to do the work</v>

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their client requires.

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You have to follow a contract in order

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to complete the work appropriately.

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If you don't, it could cost you and your client money.

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So most clients will require contractors

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to carry surety bonds.

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A bond is basically a guarantee that the client

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won't lose out just because you cannot complete your work.

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It's like an insurance policy between you and your clients.

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So let's take a minute to understand your role

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in a bond deal.

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You the contractor, carry the bond.

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You become the bond's principal.

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You will buy it from a surety company.

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You're probably going to have to get a certain bond

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for the value and type of work you're doing.

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Your client becomes the bond's obligee.

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They are the party that you promise to pay back

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in case you cannot complete your work.

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If you cannot honor your contract,

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the obligee can contact the surety company.

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They will file a claim

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for any monetary losses they experience.

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Usually the surety company will pay the client

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for their losses.

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But that doesn't mean the principal is off the hook.

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You promise to repay the surety company

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for the funds they issue to the client.

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Therefore, you will still have to pay your own money

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in the event of a claim.

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It can be hard to understand what you have to do

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when getting or paying a bond.

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So for more information,

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talk to one of our professional agents today.