Suretyship is not to be confused with insurance: suretyship is generally based on financial wherewithal and insurance is based on risk. Unlike insurance, a surety looks to its principal and indemnitors for exoneration from and/or reimbursement of any incurred loss. Typically, to secure its right to reimbursement, a surety will require its principal(s) and related individuals and entities to execute indemnity agreements in exchange for agreeing to issue bonds. These indemnity agreements delegate to the surety very broad powers and rights with respect to reimbursement for losses, costs and expenses, including attorney’s fees. Typical indemnity agreement terms include assignment of contract balances and affirmative claims upon default; payment or posting of collateral; ability to demand financial information and access to books and records; holding contract funds in trust; providing the surety with a power of attorney, and other rights.
Shields | Mott attorneys are very experienced at aggressively pursuing principals and indemnitors for reimbursement through investigation, asset location, negotiation, temporary restraining orders, injunctions, and litigation. We focus on maximizing our client’s recovery of any amounts expended under either performance or payment bonds by accurately assessing all recoverables and helping clients limit the costs incurred in converting the property into cash.