The Anatomy of a Surety Bond: How to Dissect a Bond Form

The Anatomy of a Surety Bond

Surety bond documents can be fairly confusing at first glance. Our informative guide on how to read a surety bond can help you ensure your bond meets all the requirements prior to submitting it to your obligee. Understanding the components of a surety bond will help verify you’ve obtained the required bond coverage.

A sample surety bond form

1. Bond Number

The bond number is the unique identification number assigned to the bond by the surety company. Many business licensing applications require this number to tie your application with the proper surety bond.

If you are a SuretyBonds.com customer and calling in with questions about a bond you’ve purchased, please have your bond number on hand to expedite service.

2. Bond Premium

The bond premium refers to the amount of money required to purchase a given surety bond. This premium is determined by the company you work with, such as SuretyBonds.com, and reflects the specific amount the purchaser must pay for the bond. This is different from the bond liability, which is the amount of coverage you purchase with the bond.

The bond premium is traditionally listed directly below the bond number.

For more information as to how much surety bonds cost, check out our Guide to Surety Underwriting.

3. Principal Name

The principal name refers to the individual or business your registration documentation is filed under. The name used must match the underlying agreement, application, or proposal associated with the bond.

4. Surety Name

The surety name is the name of the company that financially backs your bond. Its correct legal name must be listed to show that your bond is legally insured and valid.

Note: The name of the surety company will not be SuretyBonds.com as we are not a surety company. We connect you, the customer, with our nationwide network of surety companies to find you the best bond premium possible. The name of the company we pair you with will appear as the surety name. Learn more about the advantages of working with SuretyBonds.com.

5. State of Incorporation

The State of Incorporation for the surety is where the surety company is domiciled. The surety company that backs the bond must be licensed to do business in the state requiring it. The surety’s state of incorporation does not have to match the state the bond is for as long as the surety is licensed appropriately in said state.

6. Obligee Name

The obligee is the entity requiring the bond. Its legal name must be listed on the bond document.

7. Bond Amount

The amount of liability coverage for your bond must be written out and/or listed numerically. The bond amount required is determined by the obligee.

8. Bond Obligation

Surety bonds have different requirements based on the industry, state, or even the obligee. Probate, title, and lost instrument bonds require a guarantee. However, other surety bonds, such as construction or contractor bonds, may require the license type or classification to be listed on the bond form.

Be sure to provide all possible and pertinent information when applying for a bond to ensure all requirements are fulfilled. Much of the required information will be asked for while applying.

9. Period Beginning and End Dates

This is where the bond’s effective date will be listed, as well as the bond’s end date, if applicable.  Keep in mind that the obligee determines how the bond is written, and there may not always be an end date on the form. Visit our Ultimate Guide to Renewing Your Surety Bond for more information on how the effective date impacts the bond term and future renewals.

10. Sign and Seal Date

The date on which the signatures are completed must be listed.

11. Principal Name and Signature

A person must sign the bond when a principal signature is prompted. If the bond is in an individual’s name, the principal must provide his or her signature, matching his or her legal printed name. In the case that the principal is a company, an authorized representative will sign the bond where indicated.

12. Surety Signature

An attorney-in-fact for the surety company must sign the bond form. The company name should appear alongside the signature. Oftentimes, the bond will come with a power of attorney, which grants the individual authority to sign on behalf of the surety company

13. Bond Form Number

The bond form number indicates the specific type of obligation the bond fulfills. An obligee can reference this bond number to determine exactly what license or registration this bond is for and the specific terms that apply to each type of bond. If you are unsure what bond form is needed for your requirement, contact one of our specialists at 1 (800) 308-4358. If you have questions about your bond, it is always handy to have the bond number and bond form number on hand when calling in to expedite service.

The bond form number can usually be found along the bottom of bond forms.

NOTE: Surety bond forms may vary according to specific obligee requirements or which surety company the bond is issued by. The various components of the bond document may be phrased differently or placed in different locations.

Understanding the legal verbiage of a surety bond can take a bit of practice, so refer to our guide when you need to read between the lines. Have any lingering questions? Reach out to a SuretyBonds.com surety expert at 1 (800) 308-4358 or email [email protected]

About the Author

Rhaea Lehman
Rhaea is a sophomore at the University of Missouri studying German and Communications. She is a member of the marketing department and outreach team for SuretyBonds.com, a leading provider of online bonding for clients nationwide.