Surety Bonds / FAQ

Frequently Asked Questions


What is a surety bond?

A surety bond is a written agreement where one party, the surety, obligates itself to a second party, the obligee, to answer for the default of a third party, the principal. There are two categories of surety bonds:

Contract Surety Bonds provide financial security and construction assurance on building and construction projects by assuring the project owner (obligee) that the contractor (principal) will perform the work and pay certain subcontractors, laborers, and material suppliers.

Contract surety bonds include:

  • bid bonds, which provide financial assurance that the bid has been submitted in good faith, and that the contractor intends to enter into the contract at the price bid and provide the required performance and payment bonds.
  • performance bonds, which protect the owner from financial loss should the contractor fail to perform the contract in accordance with its terms and conditions.
  • payment bonds, which guarantee that the contractor will pay certain subcontractors, laborers, and material suppliers associated with the project.
  • maintenance bonds, which normally guarantee against defective workmanship or materials for a specified period.
  • subdivision bonds, which guarantee to a city, county, or state that the principal will finance and construct certain improvements such as street, sidewalks, curbs, gutters, sewer, and drainage systems.


Commercial Surety Bonds - guarantee performance by the principal of the obligation or undertaking described in the bond.

Commercial surety includes:

  • License and permit bonds, which are required by state law or local regulations in order to obtain a license or permit to engage in a particular business, e.g. contractors, motor vehicle dealers, securities dealers Blue Sky bonds, employment agencies, health spas, grain warehouses, liquor, and sales tax;
  • Judicial and probate bonds, also referred to as fiduciary bonds, secure the performance on fiduciaries' duties and compliance with court order, e.g. administrators, executors, guardians, trustees of a will, liquidators, receivers, and masters. Judicial proceedings court bonds include injunction, appeal, indemnity to sheriff, mechanic's lien, attachment, replevin, and admiralty;
  • Public official bonds, which guarantee the performance of duty by a public official, e.g. treasurers, tax collectors, sheriffs, judges, court clerks, and notaries;
  • Federal (non-contract) bonds are those required by the federal government, e.g. Medicare and Medicaid providers, customs, immigrants, excise, and alcoholic beverage; and
  • Miscellaneous bonds, e.g. lost securities, lease, guarantee payment of utility bills, to guarantee employer contributions for Union fringe benefits, and workers compensation for self-insurers;


The following publications provide further information on surety bonds:

The Basic Bond Book (published by NASBP/AGC) - Contact the National Association of Surety Bond Producers (NASBP); (202) 686-3700.
Glossary - Fidelity and Surety (published by SFAA).
Surety Bonds for Construction Contracts (published by ASCE Press)

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Where can I find contract documents and standardized bond forms?

Consensusdocs.org is a consensus set of contract documents developed by a coalition of 20 construction associations.
American Institute of Architects (AIA) Bond Forms and Contract Documents (Categorized by series number)
EJCDC Bond Forms and Contract Documents - Available from the American Society of Civil Engineers (ASCE)
General Services Administration (GSA) BidPerformance, and Payment Bond Forms and Contract Documents for public building construction
For information on ordering a binder of Suretymaster bond forms, e-mail request to Suretymaster of America (formerly Jennes Bond Forms)
Design-Build Institute of America (DBIA) Contract Documents(Categorized by series number)
State Bond Forms can be accessed from some state Web sites [www.state.(insert 2-letter postal code).us]
Guidelines for Evaluating Contract Bond Forms and Contract Documents - Contact the National Association of Surety Bond Producers (NASBP); (202) 686-3700
CCH Insurance Services for a variety of surety and fidelity bond forms
Surety & Fidelity Association of America (SFAA) Standard Bond Form Numbering Index - searchable database of standard form numbers with bond form samples

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How do I know I'm dealing with a reputable surety company?

Most large property and casualty insurance companies have surety departments. In addition, there are some companies for which surety bonds make up all or most of their business. In either case, in order for a company to write a surety bond in the United States, it must be licensed by the insurance department of one or more states. Although there are some exceptions, generally a surety company must be licensed in the state in which it is doing business or by the state where the obligation guaranteed by the bond is being performed.

Resources to help you learn more:

Surety Companies: What They Are and How to Find Out About Them
State Insurance Departments license companies that write surety bonds. The state in which the surety company is domiciled is responsible for performing periodic examinations of the company, and will usually have the most information about the surety.
The US Department of Treasury publishes a list of all surety companies qualified to write surety bonds on federal contracts.
SFAA's Bond Authenticity Program can assist with verifying the authenticity of a surety bond.
Members of the National Association of Surety Bond Producers can provide information on surety companies and bonding requirements.
Rating organizations that analyze and rate insurance companies' financial strength:

A.M. Best Company
Dun & Bradstreet
Fitch Ratings
Moody's Investors Service
Standard & Poor's
Weiss Ratings, Inc.


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What is the Treasury List, or T-list, and how can I get a copy?

Circular 570: Federal Treasury Listing of Qualified Sureties, also known as the T-list, provides a list of all surety companies qualified to write bonds on federal contracts. Access the T-list online at www.fms.treas.gov/c570/c570.html.

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How do I get a bond?

Surety bonds are issued through surety bond producers, also known as agents and brokers, who are knowledgeable about the surety and construction industries. Surety bond producers usually work in agencies that specialize in surety bonds or in insurance agencies that have a sub-specialty in surety bonds.

The professional surety bond producer usually maintains a business relationship with several surety companies, which enables the producer to match a contractor with an appropriate surety company. A good surety company and surety bond producer will help a contractor maintain and increase its surety capacity. Names of producers specializing in surety bonds can be obtained from the National Association of Surety Bond Producers (NASBP). NASBP members adhere to professional standards that demonstrate professionalism, expertise, and innovation in surety bonding.

The following publications provide more information about obtaining a surety bond:

How to Obtain Surety Bonds
Obtaining, Maintaining & Effectively Using Surety Credit (NASBP) - Contact the National Association of Surety Bond Producers; (202) 686-3700.
The Basic Bond Book (published by NASBP/AGC) - Contact the National Association of Surety Bond Producers; (202) 686-3700.
General Contractors' Manual (published by American Insurance Association)

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Where can I find information on surety/insurance seminars, classes, and continuing education courses?


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How can I find out about state and federal legislation affecting surety?


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Is it possible to file a bond electronically?


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How do I find out about bonding an international project?


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How can emerging or minority contractors get bonds?


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Where can I get information on subcontractor bonding?


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Where can I find construction data?


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Where can I get surety industry statistics?

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