What is the purpose of a Surety bond?

A Surety bond serves as a guarantee that a contractor or other obligated party will fulfill their commitments, such as completing a project according to contract terms and on time. If the obligated party fails to meet these obligations, the Surety bond provides financial protection by compensating the project owner or other affected parties. This assurance is crucial in construction and contract performance contexts, as it mitigates the risk that a contractor will default on their responsibilities.

In contrast, a Surety bond does not provide discounts on project costs or cover insurance expenses. It also does not specifically secure permits for a project, which are usually obtained through governmental or regulatory channels. The primary focus of a Surety bond remains on guaranteeing that the financial and contractual obligations outlined in a contract will be honored.