# What is a surety bond? *Reviewed 2026-05-15* ## Short answer A surety bond is a three-party agreement where a surety company guarantees that you, the principal, will meet an obligation to a third party, the obligee, often a government agency or a project owner. If you fail and a valid claim is filed, the surety pays the obligee up to the bond amount, then you repay the surety. It is a guarantee of your performance, not insurance on your own losses. Every surety bond has three parties: the principal who must perform, the obligee who requires the bond, and the surety that backs it. Governments require many bonds before issuing a license, and project owners require them on construction work. The bond protects the obligee and the public, not you. Because it guarantees your obligation, the surety underwrites you like a credit decision and expects repayment for any claim it pays. That is the core difference from insurance, which absorbs the buyer's own covered losses. ## Related - [Surety bond services](/bonds) - [Surety bonds overview](/surety-bonds) - [Contact our team](/contact)