The surety issues performance and payment bonds securing the principal's obligations. Suretyship differs from insurance in that the surety expects indemnification from the principal for any loss paid.
General indemnity agreements secure that recovery.
Alternative Names:
Bonding Company|Surety Company
Why it Matters?
The indemnity expectation distinguishes suretyship from insurance and shapes the surety's behavior, since it will investigate claims aggressively and pursue the principal and its personal indemnitors for anything paid. That posture means a defaulting contractor faces the surety as an adversary rather than a coverage source. General indemnity agreements typically bind owners personally, which makes surety exposure a personal liability for closely held contractors.
Frequently Confused with
Related terms
Frequently asked questions
How does suretyship differ from insurance?
Who is exposed under a general indemnity agreement?
