surity bond


No matter how hard you try, there are times when you just can’t finish a project. Professionally, not producing a promised product or completing a project could get you in a lot of trouble. Protect your reputation and company name by purchasing a surety business bond from Densmore Insurance Strategies, Inc.

Our professionals can customize coverage for your specific needs. Do you need a surety bond for one job or multiple jobs? Independent agents can compare a variety of policies to find the one that works best for you. Your agent can compare quotes to find a competitive rate.

Who Needs Surety Bonds?

  • Automotive dealers
  • Construction companies
  • Independent contractors
  • Collection agencies
  • Health clubs
  • Auctioneers
  • Medical equipment providers
  • Travel agencies
  • Notaries

What Is a Surety Bond?

Many people think of surety bonds as “surety insurance.” But they are not actually a form of insurance. Think of a surety bond as a line of credit. If you can’t complete a project, the project owner can then utilize that line of credit to finish the project as necessary. Surety business bonds are a three-party agreement. The three parties involved include:

  • The surety company supplying the bond
  • The obligee, who is the project owner
  • The principal, which is the contractor, organization or employer providing the work

Before the contractor can begin the job, the project owner may require a surety business bond from a surety company. Some projects will require a surety bond and others may not. Many federal projects or those that cost a certain amount will require a bond, which can be obtained in amounts high enough to cover the entire project.

Types of Surety Business Bonds

Although surety bonds are common in the construction/contracting field, there are many types of bonds that serve many different purposes.

  • License and permit bonds: The obligee, which is often a government agency, requires a bond from the principal. The bond states that all codes and regulations will be followed. For example, a plumber may be required to obtain a license before beginning work. To get a plumber license, you must first secure a license bond, agreeing to adhere to city plumbing code.
  • Public official bond: This bond states that elected or appointed officials will perform the duties they are given. Typical bonded positions include notaries, judges, and treasurers.
  • Probate and other court bonds: If you’re given a certain responsibility as a fiduciary or trustee, a probate bond guarantees you perform honestly and faithfully. Other court bonds include:
    • Administrator
    • Executor
    • Conservator
    • Injunction
    • Release of lien
  • Miscellaneous bonds: These are complicated bonds requiring an experienced underwriter, since most involve large risk obligations and include:
    • Utility payment guarantees
    • Union wage and welfare
  • Contract performance bond: This bond guarantees that you will follow all terms and conditions set forth by the contract. Many require advance notice. Types of contract performance bonds include:
    • Bid bonds
    • Performance bonds
    • Payment bonds

Benefits of Surety Bonds

If you are not required to purchase a surety business bond, why would you? There are multiple ways surety bonds can benefit both parties. As the principal, obtaining a surety bond prior to working with a new project owner displays business integrity and financial stability. To get a surety bond, principals must apply and meet certain standards set by a surety company. Being rewarded with a surety bond from a top quality surety company is a testament to your business strength.

For a project owner, surety bonds can be priceless. Even if a terrible tragedy prevents a principal from fulfilling a contract, the project must still be completed. Working with a principal that possesses a surety bond can provide peace of mind that, no matter what, your job will get done.

How Much Does a Surety Bond Cost?

The costs involved in getting a surety business bond depend on several factors:

  • The principal’s financial status
  • The type of bond
  • The surety company


Depending on the amount of your bond, you can expect to pay anywhere from 1 to 3 percent of the total project cost. Of course, your financial status may raise or lower your total payment.

If you are the principal, and you don’t have an excellent credit score, the surety company will most likely charge a higher premium because you represent a greater risk. Additionally, if you don’t have a history of former projects, it could be more expensive to obtain a bond simply because the surety company has no previous experience to determine how much risk you represent.

Need Help? Give us a call 515.967.3390