Who needs Surety Bonds?
What's covered
Required by state or local governments to obtain or keep a license. They guarantee your business follows the laws and regulations that govern your trade.
Bid, performance, and payment bonds that guarantee a contractor will honor a bid, complete a project as agreed, and pay subcontractors and suppliers.
Guarantee that someone appointed by a court — an executor, guardian, or administrator — faithfully carries out their duties, or that a party will pay a judgment.
A broad category covering obligations like auto dealer, freight broker, and utility bonds required to operate in a regulated industry.
If you fail to meet the bonded obligation and a valid claim is made, the surety pays the obligee up to the bond amount so the project or duty can still be completed.
What's not covered
Examples by industry
A janitorial contract requires a janitorial service bond guaranteeing you'll honor the terms of the agreement.
A state licensing board requires a permit bond before it will issue or renew your professional license.
An auto dealer posts a motor vehicle dealer bond so the state will issue the license to operate.
A freight broker bond (BMC-84) guarantees you'll meet your obligations to shippers and carriers before the FMCSA grants authority.
A public construction project requires a performance bond guaranteeing you'll complete the work as contracted.
A property manager posts a license bond guaranteeing they'll handle client funds according to state law.
Part of the Knack guide
Learn Surety Bonds alongside every other coverage in our full guide.
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