Often times, individuals or businesses that provide a particular service that requires state licensing will be required to obtain a surety bond in Arizona. The problem is that there are many business owners that are somewhat unclear as to what a surety bond is and why they need one.
What is a Surety Bond
A surety bond is several things. Some people consider a surety bond as an insurance policy, and, in some ways, it is a certain type of insurance.
For example, the state of Arizona may require an individual or a business looking to open a postgraduate school to abide by certain conditions as delineated in the Arizona state statutes code. In order to ensure that these requirements are followed, a business or individual will have to purchase a surety bond for a certain amount of money in order to receive licensing as a postgraduate education provider.
When Problems Arise
What a surety bond does is it ensures that the school will follow the rules set out in Arizona State law as to how the school provides education and how the school operates from a financial standpoint. However, what happens if a business can’t or doesn’t follow the statutes set out in state law?
Claims on the Bond
If licensing infractions occur, restitution from the surety bond writer to a state government organization will be paid. From there, the provider of the surety bond will look to the business for payment of the claim and any legal fees that may have been incurred by the surety bond provider when paying the client.
A Business’ Inability to to Repay Surety Bond Claims
If the company that held the surety bond can’t repay the provider of the bond the money that is due, many surety bond providers require the bondholder to purchase surety bond insurance. This means that the surety bond provider can receive the expenses when a claim was made on the bond without having to worry about a business’ inability to repay.
There are many nuances as it relates to a Surety Bond in Arizona. However, some of these things will need to be discussed in more detail. That’s why if your business needs a surety bond for licensing or other purposes, it would be best to visit website. to get all the information necessary.