Surety Bonds - Capstone Brokerage

Surety Bonds

Surety Bonds

Our Bond Department offers the experience and knowledge to handle all types of surety bonds. A Surety Bond is a promise to pay one party (the Obligee) a certain amount if a second party (the Principal) fails to meet some obligation, such as fulfilling the terms of a contract. The surety bond protects the Obligee against losses resulting from the Principal’s failure to meet the obligation. Below are some of the various types of Surety Bonds that Capstone provides for its clients.

For more information see our Bond Glossary.


Construction bonds cover whatever obligations the contractor assumes in a contract, in accordance with the plans and specifications which are part of the contract, for an agreed sum of money to be paid by the owner, whether public or private. The principal on the bond may be a general contractor, a subcontractor, or a lower-tier contractor. If a general contractor is the bond Principal, the owner or developer of the project will be the Obligee. If a subcontractor is the bond Principal, the general contractor will be the bond Obligee. The common types are: Bid Bonds, Performance Bonds, Payment Bonds (also referred as Labor and Material Payment Bonds), Supply Bonds and Subdivision/Site Improvement Bonds.


For over thirty years, the SBA Surety Bond Guarantee Program (SBG) has been providing Bid, Payment and Performance Bonds required for small and emerging businesses to bid on and carry out a contract, including but not limited to firms in construction, repair, maintenance, service, supply and janitorial work. This guarantee allows the surety companies to write bonds for contractors who, otherwise, would be unable to qualify. Acquiring surety bonds can be a very difficult task for those entering the federal or public works sector. Surety companies may have strict underwriting criteria that contractors must fulfill in order to qualify for a surety bond which could also cause difficulty establishing a bonding line of credit. Through the Small Business Administration of the U.S. Government Guarantee Program, contractors are able to qualify for required bonds on their own up to $6,500,000 Private or Public Works or subcontract or up $10,000,000 on Federal projects.


There are two classifications of Court Bonds that are filed in court, either Fiduciary (Probate) or Judicial (Civil).

A Fiduciary (Probate) Bond is a type of financial instrument that is required by law when a person is appointed as Fiduciary. The purpose of the Bond is to guarantee the Fiduciary’s honest accounting and faithful performance as well as to provide security in the event the Fiduciary mishandles the estate. The Bond does not provide protection for the Fiduciary, but rather it is protection for others from the Fiduciary’s actions. Common types of Probate Bonds are: Administrator Bonds, Executor Bonds, Conservator Bonds and Guardianship Bonds.

Judicial (Civil) Bonds are required when litigants seek to avail themselves of privileges or remedies which are allowed by law only upon condition that a bond with surety be furnished for the protection of the opposing litigant or other interested party. These bonds are non-cancellable and liability continues until the obligation of the principal is discharged or the applicable statute of limitations has run out. The common types of Civil Bonds are: Attachment (Defendant/Plaintiff) Bonds, Release of Lien (Defendant) Bonds, Appeal (Defendant/Plaintiff) Bonds, Stay of Execution (Defendant) Bonds, Injunction (Defendant/Plaintiff) Bonds and Cost (Plaintiff) Bonds.


An applicant obtaining a license and permit would file a License and Permit Bond required by State Law, Municipal Ordinance, or by Regulation and in some instances by the Federal Government as a condition precedent to the granting of a license or permit to do a specific job. In practice, the terms “license” and “permit” are used interchangeably. The bond provides that if the Principal shall faithfully discharge their duties as outlined in pertinent ordinances, rules and regulations and shall pay the owner of any property for loss arising from work done in violation of any ordinance, the obligation is void. Otherwise, the Surety is required to pay the sum for which it is held bound. The common types are: Contractors License Bonds, Motor Vehicle Bonds, Tax Bonds, Insurance Brokers Bonds, Surplus Lines Agents and Brokers Bonds, Mortgage Brokers Bonds, Check Sellers.


Fidelity Bonds insure against employee theft, sometimes known as a “Dishonesty Bond”, a Fidelity Bond covers employers from losses stemming from dishonest and/or negligent actions from their employees. Fidelity Bonds reimburse employers for losses, up to the amount of the bond, from employee fraud, theft, forgery, and embezzlement of the company’s cash and other valuable assets. Some insurance companies offer Fidelity Insurance which covers all employee dishonesty in general. Others offer Fidelity Bonds, which cover only specific employees (typically those entrusted with handling the organizations most important assets). Unlike Surety Bonds, Fidelity Bonds are purchased only for the employer’s benefit, and only cover losses stemming from employee dishonesty and negligence. A Fidelity Bond is not truly a Surety Bond, but a form of insurance.


Miscellaneous Surety Bonds do not clearly fall within the scope of other well-defined classifications. There are numerous surety bonds to name but some of the common types are: ERISA Bonds, Notary Bonds, Auctioneers Bonds, Financial Guarantee Bonds, Lost Securities Bonds and Self Insurers Workers Comp Bonds.