What is a Surety Bond
What is a surety bond? Surety bonds are required to do business in many industries. In many business sectors, particularly ones which require special licensure, the federal or state government will require a business to obtain a surety bond before the government will issue a license. A surety bond is a three-party agreement that legally binds together a principal who needs the bond, an obligee who requires the bond and a surety company that sells the bond. Surety Bonds deter service industry professionals and businesses from taking advantage of consumers through fraud or malpractice. When a principal breaks a bond's terms, the harmed party can make a claim on the bond to recover losses.