Surety bonding is primarily needed in the construction industry on publicly funded projects.
How can a public agency using the low-bid system in awarding public works contracts be sure the lowest bidder is dependable?
How can private sector construction project owners manage the risk of contractor failure?
A surety bond is considered a part of the insurance industry, but it shares some characteristics with the credit industry. The surety company's primary duty is not to lend the contractor money. Instead, the surety company uses its financial resources to stand behind, or back, the contractor's commitment and ability to complete a contract.