SURETY BONDS

Financial guarantees that build trust and credibility

Surety bonds provide a financial guarantee that contractual obligations, legal requirements, or professional standards will be fulfilled. Unlike insurance, which transfers risk, a surety bond is a three-party agreement designed to protect the party requiring the bond.

Surety bonds are often required by law, contract, or regulation — and can be critical to doing business.

How Surety Bonds Work

A surety bond involves three parties:

Principal
The business or individual required to obtain the bond.

Obligee
The party requiring the bond, such as a government entity or project owner.

Surety
The company that issues the bond and guarantees the principal’s obligation.

If the principal fails to meet the bonded obligation, the surety may pay a valid claim — and the principal is typically required to reimburse the surety.

Common Types of Surety Bonds

Surety bonds are used across many industries and may include:

License & Permit Bonds
Required by governments to ensure compliance with laws and regulations.

Contract Bonds
Including bid bonds, performance bonds, and payment bonds for construction projects.

Commercial Bonds
Such as fiduciary bonds, court bonds, and miscellaneous compliance bonds.

Financial Guarantee Bonds
Ensuring financial obligations are fulfilled under specific agreements.

Bond requirements vary widely by industry and jurisdiction.

What Surety Bonds Do Not Do

Surety bonds are not insurance policies and do not:

• Protect the bonded business from its own losses

• Cover poor workmanship or financial mismanagement

• Replace contractual responsibility

• Eliminate liability for non-performance

The principal remains ultimately responsible for meeting obligations.

Who Needs Surety Bonds?

Surety bonds are commonly required for:

• Contractors and subcontractors

• Real estate professionals

• Freight brokers and transportation companies

• Financial service providers

• Court-appointed fiduciaries

• Businesses operating under government licenses

Many businesses cannot legally operate or bid on projects without required bonds.

How Bonds Are Underwritten

Surety bonds are underwritten based on:

• Financial strength and creditworthiness

• Industry experience

• Contract terms and scope

• Prior bonding history

Unlike insurance, surety underwriting focuses on the principal’s ability to perform and repay.

Why Proper Placement Matters

Surety bonds vary by:

• Bond form and language

• Obligee requirements

• Jurisdictional rules

• Financial underwriting standards

Incorrect bond placement can delay projects, licensing, or contract approval.

Our Approach

At Cory Washington & Co., we streamline the bonding process while ensuring accuracy and compliance. We work with reputable sureties to help clients meet requirements efficiently and position themselves for future growth.

Bonding is about credibility — and getting it right matters.

Disclaimer

All insurance descriptions on this website are provided by Cory Washington & Co. LLC strictly for general informational purposes. They are not intended to be, and should not be relied upon as, legal, financial, or insurance advice. The information presented is general in nature and does not guarantee the availability, terms, conditions, or scope of any insurance coverage. Actual coverage is determined solely by the specific policy language issued by the insurer and remains subject to underwriting approval. Nothing on this website creates or implies an agent-client relationship, binds coverage, or alters any existing policy. Cory Washington & Co. LLC expressly disclaims any liability for actions taken, or not taken, based on the content provided here. For advice regarding your particular situation, please consult directly with a licensed insurance professional at Cory Washington & Co. LLC or another qualified insurance professional, and always review your policy documents in full.