What Are Surety Bonds?

Surety bonds in PA are a type of insurance that guarantees the fulfillment of contractual or legal obligations by one party (the principal) for the benefit of another party (the obligee). There are many forms and types of surety bonds. Here are a few settings in which surety bonds are often used:


  • Public official bonds, which guarantee honest and proper practices of individuals elected or appointed to serve in government positions.
  • Contract bonds used in the construction industry, with the contractor as the principal and the owner of the property as the obligee.
  • License and permit bonds, which ensure to the government that individuals or businesses will comply with all applicable and appropriate laws, regulations, statutes and ordinances.
  • Miscellaneous surety bonds, which are specially designed for unique situations and relationships. These can be used to support commercial, government, or individual relationships.

Why Does My Company Need Surety Bonds?

For an obligee, the benefit of a surety bond is that if the principal fails to fulfill the requirements stipulated, the surety will pay a certain amount of money to the obligee and then seek reimbursement from the principal. This way the obligee is guaranteed either the fulfillment of certain requirements or else a monetary reimbursement for failure of the principal to comply.

Surety Bonds in PA are a way to smooth relationships between two parties. They can be functional in personal or in commercial relationships.