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.

  • 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.
  • 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;

Contract surety bonds include:

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

    Commercial surety includes:

The following publications provide further information on surety bonds:


Where can I find contract documents and standardized bond forms?


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.


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.


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:


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


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


Is it possible to file a bond electronically?


How do I find out about bonding an international project?


How can emerging or minority contractors get bonds?


Where can I get information on subcontractor bonding?


Where can I find construction data?


Where can I get surety industry statistics?