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A bond is not an insurance policy, as often thought, but more like a bank loan, there are forms to complete, credit checks conducted, banking history reviewed and references checked before a bond is issued. This process is known as underwriting. A bank lends money and expects its money back with interest at the end of a specified period. With a bond, a surety lends its name for a service fee and expects the name to be returned untarnished when the obligation is completed. A surety does not expect losses, but selects only risks that are qualified and considered safe after a careful underwriting process. In the event of a loss or claim, the surety collects the bond amount from the principal (person bonded).

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