Quick Guide to Surety Bonds

What is a surety bond?

Surety bonds are promises that develop between three parties. A surety bond involves one party (the surety) promising another party (the obligee) that a third party (the principal) will perform a contractual obligation. A surety bond definition requires that the promise made by the surety must be supported by a financial obligation.

Fidelity bonds vs. surety bonds

Fidelity bonds are related to surety bonds. However, whereas surety bonds provide financial compensation in the event of an obligation, fidelity bonds provide financial compensation in the event that an employee of the party holding the fidelity bonds harms the bond holder. Fidelity bonds are a form of insurance.

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