The Basics about Surety Bonds

In the most basic of terms, a surety bond is a contract between three parties known as the obligee, the principal, and the surety. The obligee seeks a surety bond from the principal, guaranteeing that certain terms will be met as stated in the surety bond.  If the terms are not met, the obligee can file a claim, which the surety producer will evaluate, listen to both sides and then determine if the principal was in violation of the surety bond contract.  If so, the surety bond producer will then pay the obligee for damages and seek reimbursement from the principal.

Three casual people standing in a line and holding questions marks isolated on white background

The Principal is the person or company who purchases a surety bond. If the bond is approved, the surety is providing a guarantee to the obligee that the principal is financially sound to undertake the project.

The Obligee is the party that requires the principal to purchase a bond.

The Surety is a company that guarantees the bond.

Surety bonds are required in a range of different industries. There are different types of surety bonds, but they are generally categorized into two main categories:


Contact sureties guarantee that projects are completed satisfactorily and on time. These are usually required by municipalities and governmental agencies during construction on public works projects.

There are three types of contract bonds:

A Bid bond ensures that the contractor, if given the contract, will be able to finish the project as specified.  It also leads to obtaining payment and performance bonds.

A Performance bond is a bond which guarantees the quality of work in a timely manner.

A Payment bond is a bond that makes sure that the contractor will pay subcontractors, laborers and material bills associated with the construction project. 


Commercial surety bonds guarantee that the obligee will adhere to licensing laws and industrial regulation. They are used by many different people, including business owners, entrepreneurs and other working professionals.

License and permit bonds are required in order to grant a license or permit for a specified activity required by the state, municipal or federal ordinance or regulation. It guarantees that a business will operate in accordance with federal, state, or local laws and regulations.

Court bonds include judicial bonds and are required of either a plaintiff or defendant in judicial proceedings, in order to ensure that the applicant can pay for any subsequent trial costs.

Fiduciary bonds is required of those who administer a trust under court supervision.

Public official bonds is required for certain holders of public office, to protect from unethical practices or from an official’s failure to faithfully perform duties.  This bond protects the public.


In general terms, a surety bond is a three party contract between the principal (the one applying for a surety bond) the obligee (the one requiring the bond) and the surety bond producer (the party issuing the bond).  A surety bond ensures that the principal is financially sound to complete the project or task at hand.  There are basically two different kinds of surety bond groups: a commercial bond and a contract bond.

We here, at are an independent bond-only agency, committed to the principles of service, integrity and professionalism. We view our clients, employees and underwriters as our “business family”. We strive to offer each and every one of them unsurpassed attention and support to ensure a mutually beneficial relationship.  We have a keen understanding that success for everyone is only possible through helping all of our constituents achieve their goals and objectives, we believe that a truly satisfied customer, employee or vendor is the best business strategy of all.  Our surety bonding services help create a blueprint for success. Our principals have relationships nationwide and have earned the trust of underwriters. Because of our credibility within the underwriting community and longevity in the industry, we are able to act as powerful advocates for our clients. We have a unique, tactical process to professionally design and present a thorough financial picture with risk and financial analyses to the surety market.