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Contract Surety

We encourage you to This email address is being protected from spambots. You need JavaScript enabled to view it. to further explore your potential contract surety needs.

The most prevalent bonds that fall in the contract bond realm are bid bonds, payment bonds and performance bonds. Mainly associated with publicly funded projects, which fall under the jurisdiction of the Miller Act, these bonds are three-party agreements that provide protection to the owner (known as the obligee) that the contractor (known as the principal) will honor its successful bid price (bid bond) established during a public/private bid OR prosecute the work specified in the contract between owner and contractor per the terms of the agreed upon contract (performance bond). The (payment bond) guarantees the payment for all materials, subcontractors and vendors that are required for successful completion of project.   The surety company is the third party that issues the bond(s) providing owner (obligee) with the “guarantee” that the contractor (principal) will fulfill its contract obligation.   

The very FIRST thing you should KNOW about a performance and payment bond is that IT IS NOT AN INSURANCE POLICY. It is much more like establishing credit (think of obtaining a mortgage for a new home). As a contractor, your ability to obtain such bonds and the amount of bonding credit you qualify for will be based on the financial strength and experience your firm can demonstrate. It is a complicated process and hiring a qualified surety broker is only part of establishing a team of professionals that will help reach the highest levels for obtaining suretyship. There are constant changes in the surety industry because of its reliance on many factors, such as the availability of public work (public funding), the reinsurance market, and the economy as a whole. Navigating the best path for your individual business is where the journey begins. 

Some other types of bonds you may run across will be subdivision bonds, site plan bonds, maintenance bonds. Again all of these bonds will basically provide assurance to an owner (obligee) that an agreed upon contract will be prosecuted successfully by the contractor (principal).


Contract Surety Requirements

View the checklist of items we require from clients to begin qualifying them for Surety Bond credit.

Specialty Programs

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Specialty programs are usually target-specific underwriting programs tailored to accurately address the unique underwriting needs of any one industry. Usually such programs are limited to one or two specific surety markets that offer the program. The goal of a specialty program is to allow for businesses that don’t fall into the normal parameters of surety underwriting a chance to establish a consistent and fair bonding program.  

Examples of Specialty Programs:

  • Waste Hauler Program
  • Real Estate Developers  

There are surety companies that like to establish specialty programs. If you are in an industry that requires frequent surety bonds and find that it is difficult to obtain them, a specialty program is something you might consider. It would work best if your industry association is the one to establish the contact. This would indicate that there

Commercial Surety

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Commercial surety is a broad term and there are actually many types of bonds that fall within the scope of a commercial surety bond. A broad description for a commercial surety bond is one that provides a guarantee of performance by the principal of the obligation and/or undertaking described in the bond.

Commercial Surety Bonds Include: 

  • License and Permit Bonds:   required by state or local governments where the principal obtains a bond to guarantee that it will obey the terms set forth by state/local government to engage in that specific business. Examples include: contractor license bonds, employment bonds, liquor & sales tax bonds, broker bonds… 
  • Judicial and Probate Bonds:  May also be known as “fiduciary bonds.” These bonds secure performance of a fiduciary’s responsibilities and/or compliance with court orders. Examples include: ERISA bonds, administrators bond, guardians bonds, trustees of will, appeal bonds, attachment, & replevin. 
  • Public Offical Bonds: Provide guarantee of the performance of a public official’s duty. Examples include: treasurers, tax collector, sheriffs & court clerks
  • Miscellaneous Bonds: bonds such as lost securities, lease, guarantee payment of utility bills. 

There are many variations of commercial bonds. Many times the entity requesting the bond has a bond form it provides to you. Presenting this form to a qualified surety agent will allow the agent to easily establish what bond you are in need of. 

Contract Surety Requirements

  • Contractor’s Questionnaire
  • 3 Years Corporate Financial Statements Fiscal Year End (CPA prepared, review quality statements)
  • Corporate Financial statements Six Month Interim (most recent)
  • Personal Financial Statements (most recent year) Should have same date as last Corp. Year End Statement.
  • Current corporate tax returns on company and all affiliated entities (last 3 years)
  • Current personal tax returns from all owners (last 3 years)
  • Current Work-on-hand schedule for contractors
  • Current Aging Schedule of Accounts Receivables
  • Supplementary Documents
  • Bonding Forms:
    Bond Request Form
    Notice to Bidders (if Bid Bond)
    Bond Forms
    Award Letter (if Final Bond)
    Contract (if Final Bond)


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