How Do PA Surety Bonds Work?
Surety bonds are an agreement between 3 parties: the surety, the individual or business that purchases it (the principal), and the client who's protected by it. The surety promises to pay any claims if the principal fails to fulfill their obligations. Unlike other insurance policies, a surety bond protects the third party rather than the policyholder. They are used to protect customers or state taxpayers from financial loss and are usually required by federal and state government entities for businesses and contractors.
If either the principal or another party violates any terms and conditions of the contract, then the customer can file a claim against that bond.