BUSINESS INSURANCE
Business Bonds
& Surety
Bonding solutions for licenses, contracts and business obligations.
Surety bonds are not the same as traditional insurance. They provide a financial guarantee that a business or individual will meet specified contractual, licensing or legal obligations.
COMMON BOND TYPES
Bonds for Contracts, Licenses and Obligations
Bond requirements vary by contract, licensing authority and project. Common surety categories include bid, performance, payment, license and permit bonds. The principal may be required to reimburse the surety for valid losses paid under a bond.
Bid Bonds
Help assure a project owner that a contractor submitting a bid will enter the contract and provide required final bonds if awarded the job.
Performance Bonds
Guarantee performance of the bonded contract according to its terms, subject to the bond and surety underwriting.
Payment Bonds
Help guarantee payment to qualifying subcontractors and suppliers associated with the bonded project.
License & Permit Bonds
May be required by a government authority as a condition of obtaining or maintaining a business license or permit.
HOW SURETY SUPPORTS BUSINESS
Different Bonds for Different Obligations
Contract and commercial surety bonds serve different purposes. Contract bonds support project obligations, while commercial bonds often support licensing, regulatory, court or other non-construction requirements.
Contract Surety
Includes bonds such as bid, performance and payment bonds used to support specific contracts, especially in construction and public work.
Commercial Surety
Includes many license, permit, court, public official and other bonds required by statute, regulation or business arrangement.
Bonding Capacity
Sureties evaluate financial strength, experience, work program and other factors when determining available single-job and aggregate bonding capacity.
REAL-WORLD EXAMPLES
Everyday Situations
We Help Protect Against
Bond requirements usually come from a contract, license, statute or obligee. These examples show common situations where a surety bond may be required.
License Requirement
A licensing authority requires a bond before a business can obtain or renew a license.
Public Project Bid
A contractor bidding a public project must provide a bid bond and may need final bonds if awarded.
Contract Performance
A project owner requires a performance bond to guarantee completion of contractual obligations.
Payment Bonds
A payment bond may be required to protect qualifying subcontractors and suppliers.
WHO NEEDS SURETY BONDS
Required for Many Contracts and Licenses
Businesses may need bonds because of public or private contract requirements, licensing rules, court obligations or other agreements. Bond form and underwriting requirements vary by obligee and surety.
Retail & Wholesale
Restaurants & Food Service
Contractors & Trades
Professional & Service Firms
Office & Technology
Health & Wellness
Real Estate & Property Mgmt
Many Other Bonded Businesses
BONDING IS DIFFERENT FROM INSURANCE
A More Complete and Commercial Surety Option
Insurance generally transfers covered risk to an insurer. A surety bond is a three-party agreement in which the surety guarantees the principal’s obligation to the obligee and may seek reimbursement from the principal for losses paid.
NOT THE SAME THING
Surety Bond
✓ Includes General Liability coverage
✓ Adds eligible commercial property coverage
✓ Commonly includes business-income protection
✓ Optional endorsements may be available
✓ Convenient package for many eligible businesses
VS
Traditional Insurance
✓ Covers covered third-party liability claims
✓ Bodily injury and property damage
✓ Products/completed operations
✓ Personal and advertising injury
✓ Useful when business property coverage is not needed
RELATED BUSINESS COVERAGES
Additional Coverages to Consider
Depending on your industry and operations, you may also want to consider:
Commercial Auto
Workers’ Compensation
Cyber Liability
Professional Liability (E&O)
Commercial Umbrella
Employment Practices Liability (EPLI)
Get the Bond Your Contract or License Requires
Let us review the bond requirement, obligee form, contract amount and underwriting information to help pursue the appropriate surety market.