What Does Superseded Suretyship Rider Mean?
A superseded suretyship rider is an extra provision that can be purchased for a surety bond. Adding this rider to a surety bond extends the coverage from the bond past its set expiration date. This gives the parties involved in the transaction more time to complete their contract obligations with the protection of the surety bond.
Insuranceopedia Explains Superseded Suretyship Rider
Surety bonds are used when two parties are involved in a contract and there is a risk that one party might not meet their obligations, creating a financial loss for the other party. They are commonly used when a property developer hires a contractor because if the contractor doesn’t complete their work, say because they go out of business, the property developer will face a significant loss. As a result, they will buy a surety bond from an independent third party like an insurance company. If the contractor fails to meet their obligation, the third party will cover the loss for the property developer.
Surety bonds have a set expiration date. If the parties involved are worried that their project will last longer than the expiration date, they can pay extra for the superseded suretyship rider to add more time on their bond.