What You Should Know About Surety Bonds

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If you are or have worked with a contractor or had to bail someone out of jail, you may have encountered a surety bond. These bonds involve three parties: those purchasing services, those providing services and the surety company that assures the provider will complete the contract. This is what you should know about these bonds.

Surety Companies

Surety bond companies are typically part of insurance companies, but they are often a specialized division or subsidiary of these organizations.

However, bail bonds are a type of surety bond. These bonds are not typically purchased through an insurance company. Therefore, if you are looking for this type of surety bond, you may search surety bondsman Yadkin NC.


Surety bonds are regulated by the state. In the case of bail bonds, the state limits the fees on these bonds, typically between 10% and 15%.

If you run a construction or other services company, you can purchase bonds for between 3% and 5% of the contract price. This variance is dependent upon the type of contract, how long it will take to fulfill and its size. The contractor’s reputation and longevity in the market may also be considered. You can purchase a bid bond, but many of these have no charge. Performance and payment bonds do have a fee.


If you purchase a bail bond, your risk is entirely based on whether the defendant adheres to the court’s requirements. Therefore, you are responsible for ensuring the suspect shows up to all required court dates and fulfills any judge’s orders, including completing any classes or counseling that may be ordered. In any case, you lose the 10-15% fee.

If you own a service company and purchase a bond on a specific contract, a surety bond will protect you from liability if you or a subcontractor default on the contract. Your personal assets are protected from litigation in these cases.

Surety bonds protect both the buyer and seller of a service. Because some surety companies often require some form of collateral, make sure you understand all the requirements before purchasing a bond.