Assume you are an insurance producer, and your primary focus is selling insurance products. When you get a call from a client about a surety bond, it may cause a panic. Surety bonds are so different from insurance that many insurance producers surrender, and don’t offer bonds at all. While this may work for some agencies, it may not be how you want to run your agency. Offering some surety products lead to additional sales and a stronger relationship with your clients, which will boost your client retention.
But Why is Surety so Misunderstood?
There are a lot of misconceptions in the marketplace about bonds. This is primarily because, to sell surety bonds, the seller needs an insurance license. This gives the insurance producer and the customer the illusion that bonds are insurance products when it’s actually the opposite of insurance. A surety bond is defined as a contract among at least three parties: The obligee (the party who is the recipient of the obligation), the principal (the party who will perform the contractual obligation), and the surety company (the party who assures the obligee that the principal can perform the contract).
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