A surety bond is a promise. A surety company guarantees to the party requiring the bond (the obligee, often a state agency, city, or project owner) that your business (the principal) will follow the law or finish the job as agreed. If you do not, the surety pays valid claims, and then looks to you to pay it back.
That makes a bond different from insurance: it protects your customer or the public, not your business. But you can’t get licensed, pull permits, or bid on many public and commercial projects without one. We write bonds alongside your other commercial coverage, so licensing, certificates, and bonds come from one place.
What Surety Bonds typically covers
- License & permit bonds. Required by many states, counties, and cities to get or renew a contractor or business license or to pull permits — for contractors, auto dealers, mortgage brokers, and other licensed trades.
- Bid bonds. Guarantee that if you win a bid, you will sign the contract and provide the required performance and payment bonds.
- Performance bonds. Guarantee to the project owner that you will complete the work according to the contract.
- Payment bonds. Guarantee that subcontractors and suppliers on the project get paid. Commonly required alongside performance bonds on public work.
- Commercial & miscellaneous bonds. Notary, court and fiduciary, tax and customs, utility deposit, and other bonds required by law or contract.
- Bonding lines for growing contractors. An established bond program with a surety so you can bid larger jobs as your financials grow.
A growing electrical contractor wins its first public school project, and the bid documents require bid, performance, and payment bonds. We help pull together its financial statements and work history, place the bonds with a surety, and set up a bonding line for future bids. The contractor also adds the general liability and workers’ comp limits the contract requires, all from one agency.
Businesses that commonly carry Surety Bonds
- Contractors and trades that need a license or permit bond
- Contractors bidding public or commercial projects
- Subcontractors whose GC requires performance and payment bonds
- Auto dealers, mortgage brokers, and other licensed businesses
- Notaries, estate fiduciaries, and court-appointed parties
- Businesses with utility, tax, or customs bond requirements
What it usually does not cover
- It doesn’t protect your business. A bond protects the obligee. If the surety pays a claim, you are expected to repay it under the indemnity agreement you sign.
- Not liability insurance. Injuries and property damage are general liability claims. Bonds don’t replace GL, workers’ comp, or builders risk.
- Your own losses. Damage to your tools, equipment, or the project itself needs property, inland marine, or builders risk coverage.
- Work outside the bonded obligation. A bond guarantees the specific license, permit, or contract it was written for, not your other jobs.
- Claims you can’t support. Sureties investigate claims. Keep contracts, change orders, and payment records to defend against unfounded ones.
- Expired or canceled bonds. License bonds must stay in force. A lapse can suspend your license, so watch renewal dates.
Independent means we compare — not just quote one company
We write surety bonds through our surety and wholesale partners. Small license and permit bonds can often be issued quickly with a short application. Contract bonds are underwritten on your experience, financial statements, and credit, and we help you put that package together.
Tips before you buy
- Check the exact bond form and amount the obligee requires before you apply. Wording matters.
- For contract bonds, have CPA-prepared financial statements, a work-in-progress schedule, and a list of completed jobs ready.
- Keep personal and business credit clean, since it often drives bond pricing for smaller bonds.
- Put license bond renewals on the calendar. A lapsed bond can mean a suspended license.
Coverage that pairs with Surety Bonds
General Liability
Third-party injury, property damage, and advertising injury claims — plus defense costs.
Learn moreWorkers’ Compensation
Medical bills and lost wages for employees hurt on the job — plus employers liability.
Learn moreBuilders Risk
Buildings under construction or renovation, plus materials on site and in transit.
Learn moreTools & Equipment (Inland Marine)
Tools, equipment, and property on the move or at job sites.
Learn morePopular with: Contractors & Trades · Landscaping & Lawn Care · Trucking, Hauling & Delivery · Professional & Medical Offices · All commercial coverage
Surety Bonds questions
How much does a surety bond cost?
You pay a premium that is a percentage of the bond amount, based on the bond type, your credit, and for contract bonds your financial strength and experience. Many small license and permit bonds cost a modest flat premium per year.
What is the difference between a bond and insurance?
Insurance protects you. A bond protects the party that required it. If the surety pays a claim on your bond, you are generally obligated to pay the surety back.
How fast can I get bonded?
Many license, permit, and notary bonds can be issued within a day or two once the application is complete. Contract bonds take longer because the surety reviews financials and work history.
Can I get a bond with bad credit?
Often, yes, though the premium may be higher or collateral may be required for some bond types. Tell us your situation and we will look at the options.
Do I need a bond to get a contractor license?
It depends on your state, county, city, and trade. Some require a license or permit bond, and others do not. Tell us where you work and we will check the current requirement.
We cover your assets
Let’s build the right commercial program
Tell us about your business once. We shop multiple carriers, explain the trade-offs in plain English, and handle certificates, audits, and renewals after you bind.
Educational only — not a policy, quote, or coverage guarantee. Coverage, eligibility, and carrier availability vary by state, class of business, and underwriting. Policy language controls. Talk with a licensed Asshield agent about your situation.