Publish Date: August 3, 2023
Author: Will Chapman
Tags: Blog - SeubertU

Surety Made Simple: What is a Surety Bond?

By Will Chapman, Sr. Vice President of Surety Bonding

“What do you do for work?”  For those of us in the surety industry, this is a question that can cause apprehension and lead to a long process of explanation.  A response of “I work in surety” will generally result in a blank stare or a look of confusion.  While “I’m in bonds” will generally lead to a conversation about investments in corporate or municipal bonds.  So, what exactly is a surety bond?

A surety bond creates a written agreement between three parties:

  • Surety – an insurance company that guarantees the obligation stated in the surety bond
  • Principal – the party that is required to provide a third-party guarantee. Examples of a principal can include:
    1. A general contractor to a project owner
    2. A subcontractor to a general contractor
  • Obligee – the party that requires a third party to guarantee the obligation created in its relationship with the principal. Examples of an obligee can include:
    1. A public entity such as a state or municipality
    2. A project owner
    3. A general contractor (when requiring a bond of its subcontractor)

In construction, a performance bond guarantees the performance of a contract, and a payment bond guarantees payment of all first- and second-tier subcontractors and suppliers.


In the following weeks, as a part of this “Surety Made Simple” series, I will share insights into the underwriting process and the crucial role played by a surety bond agent. Stay tuned for valuable information and a better understanding of these essential aspects.

Contact us to see how you could minimize risk:


Will Chapman is the Senior Vice President of Seubert’s Surety Bonding operation. He joined the agency in April of 2022 and has more than 18 years of industry experience. In his current role, Will is responsible for business development and nurturing customer relations, department production, and further expanding Seubert’s footprint.