Role of the Surety

Payment bonds and performance bonds are issued by a surety.  For this reason, these bonds are commonly known as surety bonds.

It is important to remember the three main parties to the surety bond:

  1. Surety– This is the entity (typically, a division of an insurance company) that issues the  bond. The surety guarantees obligations on behalf of its principal, such as the performance of the contract in the event of a default (performance bond) or the payment to those subcontractors and suppliers working under the contractor-principal providing labor, services, or materials (payment bond).
  2. Principal – This is the entity (contractor) that the surety bond is issued on behalf of.  The principal along with personal and corporate guarantors will execute a General Agreement of Indemnity before the surety bond is even issued outlining the rights and remedies of the principal/guarantors and the surety.
  3. Obligee – This is the entity (or entities) that can make a claim against the bond and who the bond is ultimately intended to benefit.

Please check out this article for more information on the nuts and bolts of surety bonding.


Please contact David Adelstein at or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.