A surety bond is a binding contract between three different parties, which include the principal (the one who needs the bond), the surety (the company who writes the bond), and the obligee (the department requiring the bond).

A surety bond provides a guarantee to the obligee that the principal will conduct themselves per the terms outlined in the surety bond.


Surety bonds are legally binding contracts that ensure obligations will be met between three parties:

    • Principal: whoever needs the bond
    • Obligee: the one requiring the bond
    • Surety: the insurance company guaranteeing the principal can fulfill the obligation
  • Surety bonds work as a form of protection. If the bond’s requirements are not met, such as not performing contracted work or failing to pay suppliers or vendors, a claim may be filed against the bond. Think of a surety bond as a form of credit to the principal. Whether claims or made by the public or the obligee, they must be repaid by the principal to the surety.
  • Although the surety backs the bond, you are required to sign an indemnity agreement. This is also known as a general agreement of indemnity, and it includes your business and all owners.


All businesses are unique, so not everyone requires the exact bond. In general, there are three main categories of surety bonds that may be required as part of doing business. The three categories of surety bond types include:

  • License and permit bonds – these types of bonds are required for various professionals so that they can operate legally. Auto dealers, licensed contractors, and freight brokers are some examples of professionals required to secure a license or permit bond.
  • Contractor bonds – individuals or businesses working on public construction projects are likely required to obtain a contractor bond.
  • Court bonds – these bonds are required by certain courts for a variety of purposes, such as probate or judicial bonds.

The most popular bonds include:

  • Contractors License Bond

  • Disciplinary Bond

  • Fidelity Bond

  • Employee Dishonesty Bond

  • Bid Bonds

  • Performance Bonds

  • Business Services Bond

  • And More!

Who needs it?

Contractors, subcontractors and independent tradesman should carry commercial insurance. It not only protects your business, but it is often a requirement by many employers before you can start working for them. Common trades that need contractors insurance include:

  • Construction

  • Carpenter

  • Plumber

  • Electrician

  • Landscaper

  • Painter

  • Handyman

  • Heating & Air

  • Masonry

  • And More!

It’s always good to have insurance in case of accidents, even if it isn’t required contractually.

How much does it cost?

One of the most significant factors that affects your contractors insurance rate is the type of work that’s involved in your specific trade. For example, roofing contractor are exposed to more risks that an HVAC technician isn’t, and vice versa.

Other things that affect the cost of contractors insurance are employees, coverage needs, vehicles, location and claims history.

At Coral Point Insurance we specialize in customizing your quote to match your specific business needs which allows us guarantee you the most accurate quote, with the best coverage at the greatest rate.

Basic Coverages

  • General Liability (GL): often referred to as business liability insurance, is coverage that can protect you from a variety of claims including bodily injury, property damage, personal injury and others that can arise from your business operations. Typically needed before a contractor can begin work on a job
  • Commercial Auto: Commercial auto insurance is liability and physical damage protection for vehicles, such as cars, trucks and vans, that are used for business. Commercial vehicles require a separate policy because they’re typically exposed to more risk than personal vehicles. You have the choice to cover attached equipment such as ladder racks and permanently attached tool boxes. Individual tools and materials usually aren’t covered under this policy.

Other coverages contractors might need

  • Business Owners Policy (BOP): Packages contractors liability and coverage for personal property and commercial buildings into one policy.
  • Workers’ Compensation: Protects if your employees become ill or injured while at work.