Surety Bonds

What are Surety Bonds?

Surety bonds are sold to guarantee the performance of one party of a transaction and can cover nearly all kinds of contractual agreement. At their core, surety bonds make sure that a business or person performs the work they’ve been contracted to do. Surety bonds typically concern three parties: the principal party (who is under obligation), the obligee party (who requires service), and the surety (insurance company).¹ For those occasions where the principal party does not render its services, the surety assumes the obligation in its place as stipulated by a separate contract.² Surety bonds are similar to property and casualty insurance in that they are a form of risk management, but operate under a different set of principles and obligations.³

Who needs Surety Bonds?

Construction contractors frequently purchase surety bonds to ensure they can complete their contract and pay their suppliers and subcontractors in a timely manner. Other companies and businesses can benefit from a surety bond on a regular or case-by-case basis, depending on the industry.

All About Insurance can provide bonds in the form of:

• Performance and Payment Bonds – a bond that guarantees a job is satisfactorily completed by a contractor.
• Contractor Bonds – a surety bond specially targeted for contractors.
• Sub-Division Bonds – bonds that guarantee specific portions of a project.
• Court Bonds – a bond that protects from potential costs resulting from a court case’s outcome.
• Conservator Bonds – a bond that protects against the mishandling of a minor or disabled adult by his or her contractor (legal protector).
• Fidelity Bonds – covers losses derived from the fraudulent acts of individuals.
• Public Officials – safeguard the performance of public officials from losses imposed upon the taxpayer.
• Liquor Licenses – mandate compliance with state liquor laws.

Our agents specialize in business insurance needs and understand that every business needs a special form of coverage. All About Insurance agents will discuss those needs with you while crafting a policy that covers your unique business concerns.

¹"SIC 6351: Surety Insurance." Encyclopedia of American Industries. Ed. Lynn M. Pearce. 6th ed. Vol. 3: Finance, Service & Public Administration Industries. Detroit: Gale, 2011. 2468-2473. Gale Virtual Reference Library. Web. 2 Nov. 2015.

²"Principal and Surety." Gale Encyclopedia of American Law. Ed. Donna Batten. 3rd ed. Vol. 8. Detroit: Gale, 2010. 94. Gale Virtual Reference Library. Web. 2 Nov. 2015.

³"SIC 6351: Surety Insurance." Encyclopedia of American Industries.