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Different than insurance, a surety bond is designed to guarantee a principal's integrity and honesty, performance and financial responsibility, as well as compliance with a law or contract.
Many of our clients bundle multiple insurance policies for convenience, discounts, and broader protection. Explore these other personal insurance options.
Warehouse bonds
Required for most grain elevator operators. This bond guarantees that the elevator complies with the rules and regulations set forth by state and federal agencies regarding grain storage.
Dealer bondsRequired for people licensed with the Department of Agriculture who buy and resell agricultural products. Dealer bonds include grain dealer bonds, hay dealer bonds, livestock dealer bonds, milk dealer bonds and produce dealer bonds.
Fuel tax bondsRequired for fuel sellers, such as convenience stores, to guarantee payment of all required taxes, penalties and any interest owed.
Federal bondsRequired for fuel manufacturers or distributors to guarantee that the principal will comply with federal agency rules and regulations, as well as pay required taxes.
A surety bond is a financial guarantee that helps ensure an individual or business fulfills a legal, contractual, or licensing obligation. Unlike traditional insurance, which protects the policyholder, a surety bond protects the party requiring the bond by providing financial compensation if the bonded party fails to meet its obligations.
Many businesses are required to obtain surety bonds before they can be licensed, bid on projects, or enter into certain contracts.
Surety bonds are commonly required for contractors, construction companies, auto dealers, freight brokers, mortgage brokers, notaries, businesses applying for professional licenses, and companies performing work under government contracts. The specific bonding requirements vary depending on your industry, state regulations, and contractual obligations.
An insurance professional can help determine which type of bond your business needs.
There are many different types of surety bonds, including contractor license bonds, bid bonds, performance bonds, payment bonds, permit bonds, court bonds, probate bonds, fidelity bonds, notary bonds, ERISA bonds, freight broker bonds, and commercial license and permit bonds.
The right bond depends on your profession, business activities, and the requirements of the organization requesting the bond.
Although they're often purchased through insurance agencies, surety bonds and insurance policies serve different purposes. Insurance protects the policyholder against covered losses, while a surety bond guarantees that the bonded party will fulfill a legal or contractual obligation. If the surety company pays a claim, the bonded individual or business is generally responsible for reimbursing the surety.
Understanding this distinction is important when determining the type of protection your business needs.
A performance bond guarantees that a contractor will complete a construction project according to the terms of the contract. If the contractor fails to perform as agreed, the surety company may compensate the project owner or arrange for the project to be completed, subject to the bond's terms.
Performance bonds are commonly required on public construction projects and many private commercial projects.
A bid bond provides assurance that a contractor submitting a bid intends to enter into the contract if selected and can obtain the required performance and payment bonds. Bid bonds help protect project owners from financial losses if the winning bidder fails to honor its proposal.
Many government agencies and large commercial construction projects require bid bonds during the bidding process.
The cost of a surety bond depends on several factors, including the type of bond, required bond amount, applicant's credit history, financial strength, business experience, and underwriting requirements. Many license and permit bonds cost only a small percentage of the total bond amount.
An independent insurance agency can obtain quotes from multiple surety companies to help you find competitive pricing.
Many standard license and permit bonds can be issued quickly, sometimes on the same day after the application and underwriting process are completed. Larger contract bonds or bonds requiring detailed financial review may take additional time depending on the complexity of the request.
Providing complete financial information and documentation can help speed up the approval process.
Yes. Surety bonds are available for businesses of all sizes, from sole proprietors to large corporations. Whether you're applying for a contractor's license, opening a dealership, or bidding on a public project, there are bonding solutions available for many small businesses.
Your insurance agent can help identify the bond that best fits your business and licensing requirements.
Many surety bonds require annual renewal, although renewal periods vary depending on the bond type and the organization requiring the bond. It's important to renew your bond before it expires to avoid interruptions to your business license, contracts, or legal obligations.
Your insurance agency can help monitor renewal dates and assist with maintaining continuous bond coverage.
