Our Bonds and Surety Insurance Tool allows you to compare every plan offered by Canada's leading insurance providers. Curious about this coverage area? The Frequently Asked Questions can help you determine what sort of product you should be looking for.
Compare Bonds and Surety Insurance Policies
Frequently Asked Questions(click to expand)
What Are Surety Bonds?
- the principal (client)
- the surety (guarantor)
- the obligee (party requiring the bond)
The surety ensures that the obligee is paid an agreed amount if the principal fails to meet the terms of a contract. This is designed to protect the obligee against a financial loss if the principal fails to meet a stipulated obligation.
Surety is not insurance but a form of credit used as a guarantee. Therefore if the principal does not fulfil its bonded obligation, the obligee can make a claim demanding that the surety company satisfy the obligation or pay the bond penalty.
The surety company has the right to reimbursement from the principal in the case of a paid loss or claim.
Who Needs Surety Bonds?
Various types of government (federal, state or municipal) require bonds so that certain business activities comply with laws and regulations.
What Types of Bond Are There?
- license and permit bonds
- court bonds
- public official bonds
- miscellaneous bonds
Contract surety bonds are commonly used in the construction industry to guarantee the performance of a contract. The following types of contract surety bond are:
- contract bonds
- bid bonds
- performance bonds
- payment bonds
- maintenance bonds
Other types of surety bond include:
- business service bonds
- penal bonds
- electronic surety bonds
How Much Do Surety Bonds Cost?
While the principal will generally pay 1-15% of the bond amount they will not have to pay the entire total.