Surety Bonds

Surety Bonds
A surety bond is a three-party written agreement by which one party (the surety) guarantees another party (the obligee) that a third party (the principal) will perform according to the bond, statute, contract or other obligation. The surety bond protects the obligee by guaranteeing performance to the obligee if the principal does not fulfill their obligation.

Surety – The Insurance Company Obligated to be liable for the performance of a contract, debt or failure of a duty of another party. 

Obligee – Government Agency, Private Developer/Owner or Other Party Protected by the bond. The one to whom the principal, and subsequently the surety, has become obligated. 

Principal – General Contractor or Business Bound by construction contract, other contract, statutes, or other obligations to perform or pay a debt.



Categories of Surety Bonds:

The two general categories of surety bonds are: contract and commercial. Bonds are purchased by a wide variety of businesses and individuals including construction companies, mortgage brokers, insurance adjusters and more. A business will demonstrate its commitment to financial responsibility and ethical business practices by purchasing a surety bond.

Construction/Contract Surety Bonds

Commercial Surety Bonds

No other risk management product provides the comprehensive protection that surety bonds provide. Bonds serve as a critical risk management and public policy function, protecting small businesses, workers and taxpayers, creating economic growth, and enabling innovation.

Examples of Surety Bonds:

Construction Bonds

Court Bonds – Fiduciary

Court Bonds – Judicial

License and Permit

Public Official Bonds

Bonds Protecting the U.S. Government

Miscellaneous Bonds

The Benefits of Surety Bonds

A Construction Industry Example

The construction industry can be a risky business; however, a contract surety bond provides the essential protections and services necessary to support our country’s immediate and future infrastructure needs. There are multiple benefits of using a contract surety bond:

-Ensures Project Completion by Prequalification

-Provides Contingency Planning in the Event of a Contractor Default

-Protects Tax Dollars While Promoting Economic Growth

-Ensures Payment to Workers

-Increases Innovation

-Supports Contractors by Providing Critical Resources