A Surety Bond is a three-party agreement whereby the surety assures the project owner (obligee) that the contractor (principal) will perform a contract in accordance with the contract documents. When a contractor requires its subcontractors to obtain bonds, the contractor is the obligee and the subcontractor is the principal.

There are three basic types of contract surety bonds.

• The bid bond assures that the bid is submitted in good faith and that the contractor will enter into the contract at the price bid and provide the required performance and payment bonds.
• The performance bond protects the owner from financial loss should the contractor fail to perform the contract in accordance with its terms and conditions.
• The payment bond assures that the contractor will pay specified subcontractors, laborers, and materials suppliers associated with the project.

Never had a bond program before? Begin with Your First Bond, which will guide you through the process.

Are you more familiar with the bond underwriting process? Proceed to the Bond Underwriting Checklist.

For more information on bonds, please read Introduction to Surety.