Surety bonds guarantee the performance or financial obligations of others. A simple definition is that a surety bond is a written agreement that usually provides for monetary compensation in case the principal fails to perform the acts promised.

Most large property and casualty insurance companies have surety departments. In addition, there are some companies for which surety bonds make up all or most of their business.

Surety bonds are issued through surety bond producers, also known as agents and brokers, who are knowledgeable about the surety industry normally. Surety bond producers typically work in agencies that specialize in surety bonds or in insurance agencies that deal in insurance policies and in surety bonds.

There are various types of surety bonds, some deal with business ventures like construction while others are associated with motor vehicles. Some states allow a type of surety bond to be posted instead of a motorist maintaining auto insurance. You may also obtain bone insurance or a surety bond for the title of a vehicle. 

This title bond guarantees to a motor vehicle department that the title to a vehicle is clear, as represented. If there is a claim, someone else has a lien or owns the vehicle, then the DMV will file against the bond. The surety would be required to pay the claim and then seek recovery from you normally.

If you are having trouble finding someone to issue you a surety bond you can contact your state’s insurance regulatory body for consumer help.

— Michelle Megna contributed to this story.


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Contributing Writer

Shivani Gite is a personal finance and insurance writer with a degree in journalism and mass communication. She is passionate about making insurance topics easy to understand for people and helping them make better financial decisions. When not writing, you can find her reading a book or watching anime.