Surety Bond Basics: Who Is Involved and How It Works

A surety bond is a legal agreement between three parties: the Principal, Obligee, and Surety, providing financial assurance that obligations will be fulfilled.

What is a Surety Bond?

It is essential to understand that a surety bond differs from insurance. It serves as a guarantee for the fulfillment of an obligation. If this obligation is not met, a claim can be filed against the bond. The individual originally guaranteeing the bond, known as the “Principal,” would be responsible for the payment. Below is a description of the terms commonly associated with surety bonds.

The surety.

The Surety could be an insurance company with a surety department that underwrites bonds, or a specialized issuer that only works with bonds. The United States Treasury issues an approved list of surety bond issuers. Unique Surety works with this select group since they are deemed appropriate by the court system, as well as most governmental agencies and leading corporations, and institutions in the United States.

The obligee.

The person or organization requiring a surety bond such as the court system, most governmental agencies and corporations, and institutions in the United States. In most cases, the obligee will require a surety bond to be issued by a highly-rated insurance company or a specialized Surety company.

The principal.

The person or company required to provide the bond, prove financial capability and any other necessary factors in order to qualify and be issued a surety bond.

Surety bonds are issued through surety bond producers. A surety bond agent is appointed by an issuer with established credentials. Most quality surety bond agents specialize in surety and are members of the National Association of Surety Bond Producers. Although many surety bond agents are also licensed insurance agents, they distinguish themselves as “bond-only” agencies. A surety bond agent can also be a member of a general insurance agency that writes all types of insurance in addition to bonds. A surety broker is usually an insurance agent who obtains bonds for their clients by working with an appointed surety bond agent or a carrier that accepts brokered business.

Unique Surety is a bond-only agency directly appointed by multiple surety carriers on the US Treasury List 570.

Stay up to date with our upcoming blog to better understand the surety process and to become a better-prepared consumer. Unique Surety will help to determine if you are a qualified candidate to secure a surety bond. There are many different kinds of bonds that satisfy various needs. Unique Surety specializes in appeal/supersedeas bonds, construction bonds, distributed renewable energy bonds, technology bonds, and commercial contract supply bonds.

   Our satisfied client list continues to grow.

From small businesses to large contractors, more clients are turning to us for reliable service, trusted support, and a straightforward bonding experience.

   Customers nationwide.

Wherever you’re located—from big cities to rural towns—we’re proud to support businesses across the country with dependable surety options.

   No hidden fees or secret tactics.

We keep things clear and upfront, so you know exactly what you’re getting without any last-minute surprises or fine print confusion.

   Get answers in minutes

Whether it’s a new application or a bond question, our responsive team is ready to guide you with clarity and speed.

   Improve the value with surety specialists.

By working with a surety professional who understands your industry, we’re able to expedite the process and quickly deliver your bond.