A Surety bond is a contract issued by an insurance company that provides a financial guarantee to an interested party (usually a government agency) that a named person or business will adhere to the terms established by the bond.
Surety bonds have three parties; (1) the person or business required to purchase and file the bond (the “Principal”), (2) the insurance company providing the financial guarantee (the “Surety Company”) and (3) the government agency (or other interested party) requiring the bond (the “Obligee”).
Depending on the nature of the requirement, Surety bonds are often categorized by the surety industry within one of the following:
Each of these bond categories are comprised of many, sometimes thousands of specific obligations, requirements and underwriting criteria. These broad categories seek to group the various bond requirements by certain fundamental commonalities as outlined below. However, substantial variation exists in the details of the various bonds that comprise these categories, requiring an in depth review of the bond form and underlying statutes to fully understand the obligation, risks and benefits to the various parties of a specific surety bond requirement. Fortunately, Suretypedia provides the bond form on thousands of unique surety bond requirements, which can be found through our simple search tool.