Surety Bond vs. Insurance

In traditional insurance, the risk is transferred to the insurance company. In surety bonding, the risk remains with the principal. The protection of the bond is not for the principal, but for the obligee. With insurance, the insurance company considers that a certain percentage of the premium for the policy will be paid out in losses. In true suretyship, the premiums paid are "service fees" charged for the use of the surety company's financial backing and guarantee. In surety bonding, sureties view their underwriting as a form of credit so the emphasis is on prequalification and selection. Not everyone is eligible for bonding, these days it is getting harder and harder to obtain a bond.

Although the terms "surety bond" and "fidelity bond" are often used interchangeably, the circumstances when each is used are quite different. A surety bond is used to guarantee compensation when someone fails to perform as promised, such as a contractor failing to complete a construction project. A fidelity bond is used to cover business losses due to fraud or dishonesty, such as employee theft, robbery or burglary. The requirements for both bonds are based on the applicant's financial condition and good character.

A Surety Bond is a three-party agreement whereby the surety guarantees to the obligee (the project owner) that the principal (the contractor) is capable of performing the contract in accordance with the contract documents. Performance of the contract, which is the subject of the bond, determines the rights and obligations of the surety and the obligee.

EXAMPLES OF SURETY AND FIDELITY BONDS
Adjusters surety bonds		License bonds (misc)
Appraisers surety bonds		Liquor License & Permit bonds
Auctioneers surety bonds		Lost Trust Deed surety bonds
Auction Company surety bonds		Mortgage Bankers surety bonds
Auto Dealers surety bonds		Mortgage Brokers surety bonds
Auto Registration Service		Motorcycle Dealers bonds
Auto Title bond		Notary Public surety bonds
Billboards surety bonds		Notary Public E&O Insurance
Screen Actors Guild bonds		Payday Loan surety bonds
Care Facility surety bonds		Permit Bonds (misc)
Certificate of Title surety bonds		Pet Sitting Fidelity bonds
Contract surety bonds		Pharmaceutical bonds
Contractors Bid surety bonds		Photocopiers surety bonds
Contractors License bonds		Plumbing Contractors bonds
Contract Payment  bonds		Private Investigator bonds
Contract Performance bonds		Private School surety bonds
Deferred Deposit surety bonds		Private Sewage Disposal
Delayed Deposit surety bonds		Prof. Photocopier Bond
Dry Cleaners bonds		Process Server Bond
Employee Dishonesty bonds		Public Adjusters surety bonds
Employment Agency bonds		Public Officials Fidelity bonds
ERISA Pension Trust fidelity		Roofing Contractors bonds
Escrow Agents surety bonds		Sales Tax surety bonds
Escrow Company fidelity		School Bus Drivers bonds
Farm Products Brokers bonds		Secondary School surety bonds
Fidelity Dishonesty bonds		Tax Preparer bond
Games of Chance surety bonds		Tax Preparers E&O Insurance
Immigration Consultants		Transportation Broker
Immigration Assistant		Truckers Highway surety bonds
Insurance Adjusters bonds		Truckers Permit surety bonds
Insurance Agents surety bonds		Unlawful Detainer Assistant
Insurance Producers bonds		Utility Deposit surety bonds
Insurance Broker bond		Vehicle Registration bond
Inventory Service fidelity bonds		Wholesale Auto Dealers bonds
Janitorial Fidelity bonds		Wholesale ATV Dealers bonds
Legal Document Assistant		Wholesale Motorcycle Dealers

*NOTE: Complete, print, sign, date & fax the Downloadable Application Form
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• Accessing your insurance requirements
• Matching your needs with the right kind of coverage
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