A surety bond is what’s issued by a surety company to cover for a contractor if he is unable to comply with the contractual obligations signed with the project owner. This way, the owner is secured of not losing money due to a default, the contractor gets to secure the trust of the company, and the surety company has an assurance that it will be able to gain its investment back from the contractor, creating a win-win situation for everyone.
If you want to to know how to apply for a bond online, the following steps will help you get a better idea about it:
Submit the application including your personal and professional details for securing the surety bond
Have an underwriter evaluate your position in terms of credit worthiness, experience and available capital
Go through the quote the surety company offers according to the evaluation report
You (the contractor) will have to sign an indemnity agreement agreeing to pay in full the amount the surety company agrees to back, in an event of default
After the paperwork is done, the surety company will issue the bond, which you can submit to the project owner for securing the project rights