Surety company

A company that is licensed to write a surety bond.  A surety company's primary duty is not to lend the contractor money. Instead, it uses its financial resources to guarantee a contractor's commitment and ability to complete a contract.  As part of its pre-assessment, the surety company takes an in-depth look at a contractor's entire business operations (experience, management capability, equipment, work in progress), financial strength and credit history in order to be satisfied that the contractor is capable of completing the project before issuing a bond.  When the surety company does issue a bond, and should the contractor experience difficulties on a project or is in a default situation, the surety company may take several actions. These depend on the options contained in the particular bond form and may include: providing finance to the original contractor; or providing support to ensure project completion; or arranging for a new contractor to complete the project; or paying the cost of completion up to the penal sum of the bond.