What Is a Surety Bond in Mississippi?

Businesses sometimes commit to commercial or contract surety bonds. These agreements involve three parties:

• Principal is the company or organization required to take out a bond and perform a certain task.
• Obligee is the entity requiring the bond before moving ahead with a business transaction. The bond protects the obligee.
• Surety entity is the person, business, or government which issues the bond. The surety makes a guarantee to the obligee that the principal will perform the task.

Surety bonds create a line of credit, allowing the obligee to make a claim against the principal, if needed.  Find out more about Mississippi surety bonds offered by Hawsey Insurance.

Surety Bonds – Here’s an Example

A local municipality (obligee) wants to create an administrative building. The municipality hires a contractor (principal) to build the building. To get the job, the contractor must secure a construction bond guaranteeing they will complete the project under the negotiated terms. The contractor buys a construction bond from a highly rated surety company (surety entity).

In this example, the surety bond protects the municipality by holding the surety company responsible for the contractor’s performance or lack thereof. If the contractor fails to perform, the surety company must pay back the amount agreed to in the contract or find someone else to perform the work in the given time frame.

Request a quote for a surety bond in Mississippi today!

What’s the Difference Between a Cash Bond and a Surety Bond?

• Surety bonds involve three people, the principal, the surety and the obligee. If the principal doesn’t perform as specified, the surety must pay the amount in the contract.
• Cash Bonds involve two people. A principal provides cash to a third party. The money remains on hold until the principal delivers the goods or services promised to the obligee. Cash bonds typically have lower fees than surety bonds because the money is already reserved in a protected account.

Do You Pay Surety Bonds in Mississippi Monthly?

There are no monthly payments for surety bonds. The quote is a one-time payment the surety entity pays if you fail to meet the terms of the contract. If you have any questions about obtaining commercial surety bonds in Mississippi, the experienced agents at Hawsey Insurance can help.

Do You Get Your Money Back from a Surety Bond?

No. When you purchase a surety bond you don’t get a refund during the term of the bond, which is sometimes one year or longer.

Does a Surety Bond Affect Your Credit?

Typically, the credit check for a surety bond is much lighter than a full-scale credit review. This is referred to as a soft pull which doesn’t usually impact your business credit score significantly or for a long period of time.

Are you ready to book an appointment at Hawsey Insurance to find out how to obtain a surety bond in Mississippi? We are happy to provide guidance to our clients in Mississippi and the surrounding states.