Surety bonds can be required by an individual seeking a particular type of bond, or a business owner with a variety of bonding requirements. A surety bond, also known as a performance bond, is designed to guarantee performance in the face of a set of particular risks. Each surety needs to be uniquely customized to meet the specific needs. A surety bond is generally defined as an agreement under which one party, the surety, guarantees to another party, the obligee, the performance of an obligation by a third party, the principal.

Contract Surety and Commercial Surety are two of the most common types of surety bonds. Surety bonds are frequently used in the construction industry. For example, in order to obtain a certain contract, the General Contractor must provide the obligee (project owner) a surety bond for performance as per the terms of the contract. The principal (contractor, licensee, or other applicant), in return, will need to pay an annual premium in exchange for the surety company's financial backing to extend the surety bond.

Commercial surety bonds are required for individuals or businesses by the government, legislation or by other entities. For example, license and permit bonds may be required by state, municipal, or federal regulations; these bonds could be required as a condition for engaging in a particular business or exercising a particular privilege. There are a total of eight different types of surety bonds consisting of contract bonds, license and permit bonds, judicial (court) bonds, fiduciary bonds, notary bonds, public official bonds, fidelity bonds, and miscellaneous bonds.

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Note: Policy description of coverage provided on our website are simplified and not a statement of contract. Description is only for general informational purposes. Please refer to your specific policy documents and endorsements for complete details of coverage, conditions, restrictions, and limits.