A surety bond is a contract that takes place between three or more parties, including the party that provides services, the party who receives the services, and a third party who ensures that the contract will be fulfilled by the first party.

There are many different types of surety bonds, including both contract and commercial surety bonds, that are primarily used in business to guarantee licensing, union bonds and bids on contracts. Surety bond providers need training that provides them with a knowledge of legal contracts, as well as risk management. You can find many surety bonds education and training opportunities through:

1. Insurance companies where businesses can buy surety bonds.

2. Colleges and organizations that have courses in insurance and bonds.

3. Online educational opportunities to learn more about surety bonds.

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Get training provided by companies that sell insurance surety bonds

Many insurance companies that provide businesses with insurance surety bonds also provide training for risk management and other topics relative to surety bonds to those who sell surety bond agreements.

I recommend: The Chubb Group offers classes and seminars to help agents and surety brokers stay up to date on changes in the industry. Westfield Insurance offers a Graduate Development Program in surety bonds and other types of insurance to train recent graduates for an insurance career.

Explore online surety bonds education offered by schools and organizations

To learn about surety bonds, look for training provided by online colleges and professional organizations. These organizations train insurers in risk management, surety bonding and other financial topics relevant to surety bonds. In the case of professional organizations, they often set the standard for industry by developing certification standards.

I recommend: The ABTrainingCenter.com provides an associate's degree in Fidelity and Surety Bonding. The Insurance Educational Association offers a course in surety bonds.

Take online resources to learn more about corporate surety bonds

Educational opportunities run through government agencies and professional organizations can often be found online. These resources explain what it takes to create a surety bond. Professional organizations also provide continuing educational opportunities for those already in the insurance industry.

I recommend: The National Association of Surety Bond Producers provides many educational opportunities, including continuing education, distance learning and an annual risk workshop. The Surety & Fidelity Association of America offers continuing education and networking resources for insurance companies that specialize in fidelity and surety bonds.

Apply for licensing to be a surety bond provider

Surety bond providers must be licensed within the state where the company is located to legally sell surety bonds. The state insurance commissioner regulates and issues licenses to a surety insurance broker.

I recommend: All surety bond brokers need to be licensed by the state insurance commissioner. Contact state agencies, like the Washington State Office of the Insurance Commissioner or the State of Wisconsin Office of the Commissioner of Insurance, for more information. Commissioner offices provide licensing applications, maintenance and continuing education materials.

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• •  Those who sell surety bonds should also know how to create a surety bond quote that is a fair market value for a majority of customers.

A legal, binding agreement between three parties, a surety bond is a necessary requirement in certain areas of business. Business surety bonds protect investments, deter fraud and establish trust in business partnerships. Commercial surety bonds are available for every type of business in every state.Surety bond brokers offer the experience to work with your business to determine your surety bond needs and offer up-to-date bond surety rates. Choosing the right surety bond provider is vital to receive the service and rates that your business requires. Partner with a provider of business surety bonds that:

1. Offers surety bonds specific to your business needs

2. Has a national presence as surety bond providers

3. Can offer quick turn-around time to meet your surety bond needs

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Buy surety bonds specific to your line of business from a reputable surety bond provider

Research surety bond providers and choose one that offers surety bonds that can fulfill the needs of your business. The provider should have ample experience with all aspects of the surety bond application process.

I recommend: Hire Bernard Fleischer & Sons, Inc. to issue your business surety bonds. They offer over 150 types of surety bonds to meet the needs of any business. Choose the type of surety bond you need, download the application online and mail it in.

Choose a surety bond provider with a national presence

Surety bond brokers with a solid national reputation can offer the experience and customer service you want when you purchase surety bonds.

I recommend: Choose Safeco Insurance, a reputable provider of commercial surety bonds, for your business needs. Safeco has a network of surety offices around the country and can offer customized services and competitive rates in your area. Use the Internet to receive a surety bond quote online and to find an agent in your area.

Buy surety bonds from a provider who offers quick turn-around time

In business, time is money. Securing a surety bond is a prerequisite in many business fields. Use a surety bond provider who can get you the bond you need quickly, efficiently and at a cost-effective rate.

I recommend: Platinum Insurance and Bonds has a quick turn-around time for surety bond issuance and guarantees potential clients a personal response to a surety bond request within 24 hours. With an online application to streamline the surety bond process and competitive rates, Platinum Insurance and Bonds is a fast and efficient solution to your business surety bond needs.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  Establish a relationship with a surety bond agent in your area. Each time you need to purchase a surety bond, your agent can choose the right bonding company for your specific job needs.

A surety bond is used within a legal agreement or contract to ensure that a contract is fulfilled in accordance to the agreement. Three parties—the principal, the obligee and the surety—form a contractual agreement that ensures that the obligee receives services, products or finances from the principal. If the principal defaults, the surety is liable to the obligee. From corporate to individual surety bonds, learn important surety bond key terms to ensure you understand how they work.

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Surety

Within a legal agreement among three entities, the surety is the party responsible for a debt payment when another party defaults. A surety is generally part of an insurance company and works with companies that request third-party debt payment assurance.

I recommend: Find more information on sureties supplied by the Surety Information Office.

Contract bonds

Contract bonds are used in the construction industry and generally on public bids. A contract bond holds the surety responsible to pay or perform services if the obligated, bonded party fails to deliver the goods, services or payments promised in the contract. Bid, performance and environmental surety bonds are all types of contract bonds.

I recommend: Zurich, a provider of surety bonds, offers further information on the types of contract bonds available.

Surety bond guarantee program

The surety bond guarantee program was established to ensure that small business contractors could afford surety bonds to compete in bids for projects against larger, more established companies. The program involves a guarantee by the US Small Business Administration to support the surety against major losses.

I recommend: The US Small Business Association offers extensive information on the surety bond guarantee program.

Surety bond consultant

A surety bond consultant works with the surety to handle surety bond claims and arbitrate contract disputes when needed. Surety bond consultants generally have a well-rounded background that includes legal, construction and finance expertise.

I recommend: Hays, a risk management and commercial insurance company, offers further information on the services provided by surety bond consultants.

Surety bond obligee

A surety bond obligee is the party in the three-party contract that requests a surety bond for a specific job or service. The surety bond obligee is protected with the surety bond in case the surety bond principal-the party responsible for delivering a good or service-defaults on the agreement. If the surety bond obligee defaults on the agreement, the principal party and the surety are freed from obligations stated in the contract.

I recommend: Find out more about surety bond obligees making up the surety staff at Surety Bond Associates.

Corporate vs. individual sureties

Corporate sureties are sureties that are not fully guaranteed. Corporate surety companies usually present financial statements to show financial responsibility, but the corporate surety company is not legally required to offer specific information to guarantee a bond. Most large-scale jobs and federal jobs use corporate sureties. Individual surety companies offer 100-percent guarantees on the sureties they provide and must offer specific assets to prove financial responsibility on each surety bond offered.

I recommend: Learn more about corporate and individual sureties at IBCS.

A surety bond is a contract that has three parties involved. If the contract is not executed, then the bond reimburses the party that has suffered damages. The first party is called the "principal." The principal must perform whatever the contract states. The second party is the "obligee." They are the party who is the recipient of whatever the principal is performing. And finally, the "surety" is the party the ensures that the contract is executed. If it is not, the surety pays the obligee in accordance with the contract.

Take the time to learn about business surety bonds and determine how they might be helpful for your business transactions. Here are some helpful resources to get you started. Think of this tutorial as "surety bonds for beginners."

1. Locate the websites for surety bond providers and read up on the different services that they offer.

2. Learn about bond surety rates and how they are calculated when you buy surety bonds.

3. Check out companies that provide surety bonds online.

Action Steps
The best contacts and resources to help you get it done

Find companies that sell surety bonds and educate yourself on their multitude of services

There are many companies throughout the United States that sell surety bonds to companies in a plethora of industries. Take the time to browse through the web pages of many surety bonds companies and learn how their services might apply to your business. Companies that receive surety bonds range from insurance-based businesses, to agricultural businesses, restaurant franchises and more.

I recommend: Go to the website for Mountain High Surety. This is a provider of court bonds, fiduciary bonds and more. South Coast Surety is another surety bond provider that can underwrite surety bonds in all 50 states.

Learn about the rates associated when you buy surety bonds

Whether you are buying insurance surety bonds or other corporate surety bonds, it is imperative that you understand how the rates are calculated. There are a multitude of different formulas depending on the type of bond, associated risk, type of business it is covering and current market interest rates. Read up on how these interest rates are calculated for the industry of your small business.

I recommend: Go to the website for the Surety Information Office for a discussion on surety bond rates and how they are calculated. The small business resource Score also has an article detailing how different types of surety bond rates are calculated.

Locate a surety bond company that will process and approve the bond online

With the fast pace of business in today's society, there are many surety bond companies that will process an application over the Internet. Once the bond is issued, then the business may move forward with their project. It should be noted that online surety bonds often have a contingency that all of the information provided was correct. They often continue to check the validity of that info and may revoke the bond should something be untrue.

I recommend: Check out the website for Platinum Insurance & Bonds, which underwrites bonds in a day after processing an online application. The company for Bonds Express also provides online surety bonds.