Surety Bonds

There are four basic types of Surety Bonds: Contract, Commercial, Court and Fidelity. The approval and rate charged for most Surety Bonds is based on the credit worthiness of the applicant.


A Contract Bond guarantees the performance or fulfillment of a contract or a specific obligation. A Contract Bond is not insurance and qualifying for one is similar to qualifying for a loan. The application will typically require business and personal financial statements, along with a personal guaranty and indemnity of the business owner. Collateral may be required to issue the bond, depending upon the strength of various credit criteria. A Contract Bond is a three-party obligation between the Obligee, the Principal and the Surety. The Obligee is typically a government entity, such as a city or county, that is requiring an obligation or contract. The Principal is the party who has agreed to perform the obligation. The Surety is the party that guarantees that the Principal will perform the obligation according to the contract. Contract bonds must be renewed and additional premium paid until the contract or obligation is fulfilled. Some of the typical Surety Bonds offered for contractors are:

  • Bid
  • Performance
  • Payment and Supply
  • Site Improvement
  • Subdivision

Commercial Bonds are typically required by Local, State or Federal Regulatory authorities. These bonds guarantee that a company or individual will comply with the appropriate rules and regulations of those authorities. Some common types of Commercial Bonds are:

  • Contractor’s License
  • Auto Dealer and D.M.V.
  • Mortgage Broker
  • Site Improvement
  • Sales Tax

Court Bonds are required by Local, State and Federal Courts at various stages during legal proceedings. Some bonds will require collateral, and Appeal Bonds will always require it. Some common types of Court Bonds are:

  • Appeal
  • Probate, Executor, and Fiduciary
  • Custodian and Guardianship
  • Release of Lien

Fidelity Bonds, while called bonds, are actually a type of insurance and not Surety Bonds. This insurance protects a company from losses of money or property due to employee dishonesty. They could be caused by acts such as: theft, forgery, larceny or embezzlement. Some common types of Fidelity Bonds are:

  • Employee Dishonesty
  • Pension/Trust (ERISA)
  • Apartment House Manager
  • H.U.D.
  • Title Company