Protect Your Business; Protect Your Future

We've all heard the expression: your word is your bond. But in today's litigious society, you need more than your word to operate in business. That's where surety bonds come in. They're designed to protect the public and to protect your company's reputation.

Surety Bonds

What is a Surety Bond?

A surety bond is a contract between three parties:

  1. Surety - the party that assures the obligee that the principal can perform the contractual obligation
  2. Principal - the primary party that is going to perform the contractual obligation
  3. Obligee - the party that is the recipient of the contractual obligation (i.e. the entity requiring the bond)

Why Do I Need A Surety Bond?

Surety bonds protect the public against accidental loss and liability. You may need a surety bond because an obligee requires one to fulfill contractual obligations, abide by laws or ordinances, and/or to satisfy court orders.

Is A Bond a Type of Insurance?

Surety bonds are very different from insurance. The beneficiary of the bond is a third party, the obligee. If the principal cannot, or will not, perform their obligations, then the surety company steps in to "make good" on the principal's obligation. The principal is then responsible for reimbursing the surety for any claims or expenses that the surety incurs to meet those obligations.

What Information Is Needed to Write a Bond?

The necessary amount of information depends on the type and size of the request. Some surety bonds require a great deal of paperwork, including supplying:

  • Three years of business and ownership financial information
  • Work-in-progress reports
  • Bank reference letters
  • Completed application and
  • Resumes of key employees

Other surety bonds may only require a completed application and a detailed credit check on the business and all owners. All surety companies require that an Indemnification Agreement be signed stating the principal is aware of, and agrees to, the financial obligations associated with bonding.

What Types of Bonds Are There?

Bonds can be divided into the following two categories:


A contract bond could be a bid bond, performance and payment bond, or a maintenance bond.

Types of Contract Bonds

A bid bond is a financial assurance that a bid has been submitted in good faith and, if awarded, the contractor will enter into a written contract with the obligee.

A performance bond is a guarantee that the principal will complete the job to meet the specifications agreed to in the contract with the obligee.

A payment bond holds the principal responsible for paying all of their subcontractors, laborers, and suppliers associated with the specific contract.


Commercial bonds are agreements made between the principal and an obligee that state a certain obligation will be performed. The agreements usually state the principal (or the licensee) will conform to the ordinances or laws relating to the business in which they engage. These bonds may include license and permit, fidelity, public official, probate, or court bond, among many others.

Types of Commercial Bonds

A license and permit bond is typically required from governmental agencies in order to legally license business owners in specific industries. These bonds protect consumers by guaranteeing the business adheres to ordinances and laws enforced by federal, state, and local government agencies.

A fidelity bond is a form of protection covering individuals for losses they incur due to fraudulent acts by individuals. These bonds are typically written to protect companies from the dishonest acts of their employees.

A public official bond guarantees that a public official will do their job and properly manage funds.

A probate bond is required by a court to ensure the proper handling of an individual's finances or estate. A few examples include guardianship/conservator bonds, trustee bonds, and executor bonds.

A court bond is a product of a court-ordered actions. These may include replevin bonds, lien/release of lien bonds, and cost appeal bonds.

Call us today for more information.