Suretyship

11 months ago

Insurance Glossary Team

1 minute

Plain English Definition: Suretyship is a contract where one party guarantees the performance or obligations of another to a third party.

What Suretyship really means for someone with an insurance policy

Suretyship involves a surety (usually an insurance company) guaranteeing to a third party that the principal will fulfill contractual obligations. If the principal fails, the surety compensates the third party.

Suretyship Real World Examples

A construction company obtaining a surety bond to guarantee project completion for a client.
A business providing a surety bond as a license requirement in a regulated industry.
A court requiring a surety bond to ensure compliance with legal judgments.