Surety bonds by the numbers
- $150,000
- Federal contract size that requires performance and payment bonds
- Acquisition.gov (FAR 28.102)
- $25,000
- California contractor license bond, required since Jan 1, 2023
- CA Business & Professions Code, 2023
One structure, four jobs
Every surety bond is the same three-party promise: you (the principal) will meet an obligation to a obligee, and a surety guarantees it. What separates the types is the obligation itself. Sort by that, and the whole surety world falls into four families.
| Family | Guarantees | Who requires it |
|---|---|---|
| Contract | A construction project is bid, built, and paid | Project owners and public agencies |
| License & permit | A business follows the laws of its trade | State and local licensing agencies |
| Court & probate | A duty in litigation or an estate is met | Courts |
| Fidelity | Against employee theft or dishonesty | Employers (and some clients) |
1. Contract (construction) bonds
Contract bonds guarantee a construction project. They travel in a set: a bid bond backs your proposal, a performance bond guarantees you finish the work, and a payment bond guarantees your subcontractors and suppliers get paid. Public works almost always require them. See the contract bonds hub for how they fit together.
2. License and permit bonds
These let a business get and keep a license by guaranteeing it will follow the rules of its trade. The California contractor license bond is the headline example, but the family is huge: notary, auto dealer, freight broker, cannabis, and dozens of other commercial and permit bonds. They are the most common bonds because so many trades require one to operate.
3. Court and probate bonds
Court bonds back a duty inside the legal system. Judicial bonds like an appeal bond come up in litigation, while probate and fiduciary bonds like a probate bond or guardianship bondguarantee that an executor, administrator, or guardian handles an estate or a person's affairs honestly.
4. Fidelity bonds
Fidelity bonds protect a business from its own people: theft, embezzlement, or fraud by an employee. A fidelity (employee dishonesty) bond covers general staff, and an ERISA bond is the federally required version protecting a retirement plan. Strictly, fidelity bonds are insurance-like coverage, but they are placed through the same surety markets.
Which one do you need?
You rarely choose. The obligee, the agency, court, or owner requiring the bond, names it in a statute or on a bond form. Your job is to read that requirement; ours is to place the exact bond fast and at the best rate. Not sure which family you are in? The glossary defines the terms, and a quote gets you the specific bond identified and priced.