IS COLLATERAL REQUIRED TO OBTAIN A BOND?
Should the personal and corporate assets not be acceptable to the Surety, and/or if the personal and corporate credit history are questionable, then collateral or an additional indemnitor or both may be required by the Surety Company to guarantee reimbursement to the Surety Company if a loss occurs. A Surety Company may also require collateral if there is a high risk or unusual obligation on the bond because it will reduce some of the risk that a Surety Company assumes when issuing a bond. Some acceptable examples of collateral are cashiers checks, certificates of deposit and irrevocable letters of credit. After all obligations of the bond have been met, the collateral is returned to the Principal and the Obligee releases the Surety Company from their obligation under the bond.
