Understanding Commercial Surety

  • Surety Bonds are one of the most commonly used commercial contract safeguards. In my research I found that these bonds are typically used in lieu of letters of credit and can be even more cost effective when compared to contracts requiring performance bonds. Surety Bonds have a wide variety of uses, some more obscure than others. The underlying reason for using these bonds is always the same, as contracts are usually tied directly to a person or entity's financial ability to meet the requirements of that contract.


    Surety bonds serve numerous purposes for many organizations. They are used to protect the public, as well as policyholders, for various types of policies. If you have further questions about surety bonds or commercial applications in particular, contact an agent from your state today to get the information you need. When a bond is required, there are specific demands in terms of compliance with state and federal regulations. Failing to comply with these regulations can jeopardize the validity of your bond, perhaps even necessitating that you pay out funds as a reimbursement or endangering your contracting license. Overall, understanding the requirements needed for issuing commercial surety bonds will benefit any contractor working within this structured system. For more detail, please refer to the info-graphic below.