What Is a Surety Bond?
A surety bond is a financial guarantee that a business or individual will meet specific obligations required by law or contract. It involves three parties:
- Principal — the business or individual
- Obligee — the entity requiring the bond
- Surety — the company backing the bond
If obligations are not met, a claim can be filed against the bond.
Types of Surety Bonds
Commercial Bonds — required for licensing and compliance. Examples: auto dealer bonds, contractor license bonds, freight broker bonds.
Contract Bonds — used in construction projects. Examples: bid bonds, performance bonds, payment bonds.
Court Bonds — required in legal proceedings. Examples: probate bonds, appeal bonds, guardianship bonds.
How Surety Bonds Work
A bond guarantees performance or compliance. If the principal fails to meet their obligation:
- A claim is filed
- The surety may pay damages
- The principal is responsible for reimbursing the surety
How Much Do Bonds Cost?
Most bonds cost 1%–3% of the total bond amount for qualified applicants. Pricing depends on credit score, bond type, financial strength, and experience. Some bonds are issued instantly with fixed pricing.
Do You Need a Bond?
You may need a bond if you:
- Are applying for a business license
- Are bidding on a construction project
- Are required by a court
- Handle client funds or regulated services
Requirements vary by state and industry.
How to Get a Bond
- Identify your bond requirement
- Complete a short application
- Receive a quote
- Purchase and receive your bond
Many bonds can be issued in minutes.
Fast approvals · Competitive rates · Simple application process · Support across all 50 states