Surety Bonds That Businesses Need and How to Choose the Right One 

If you run a business in Texas, there is a good chance you have heard the term “surety bond” but may not be entirely sure what it means or whether you need one. Surety bonds are a form of financial guarantee that financially protects clients, government agencies, and the public when a business fails to meet its contractual or legal obligations. They are not insurance in the traditional sense, but many businesses are required to carry them, and an independent insurance agency is often the best place to start.

How a Surety Bond Works

A surety bond involves three parties: your business (the principal), the party requiring the bond (the obligee), and the bonding company (the surety). If your business fails to fulfill its obligations, the surety may step in to cover the loss up to the bond amount, and your business is then responsible for repaying the surety.

Common Types of Surety Bonds for Texas Businesses

Different industries call for different bonds. Some of the most common include:

• License and permit bonds, which many Texas municipalities and state agencies require before issuing a business license
• Contract and construction bonds, including performance and payment bonds that protect project owners and subcontractors
• Court bonds, required in certain legal proceedings

Choosing the Right Bond

The right bond depends on your industry, the size of your contracts, and what the obligee specifically requires. Bond amounts are often tied to state-required minimums or contract values. Working with a knowledgeable agent helps ensure you get the correct bond type and sufficient coverage for your situation.

Get Help From a Local Expert

Not sure which bond you need? Contact Atlas Auto Insurance to speak with an agent who understands the Texas business landscape and can help you find the right bond for your needs. We serve businesses in Arlington, TX and can help your business get bonded.

This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information.