JW Surety Bonds

Business Bonding

The term “bond” can be applied to many different financial products, but what is “business bonding”? To be bonded means that an insurance carrier is guaranteeing the performance of your business. This is not be confused with a corporate bond, which is a financial instrument used to raise capital. Business Bonding = TrustWhen a business gets bonded it does not raise capital, but does bring security to any work performed by said business.

How does business bonding work?
When a company is bonded, there are three parties involved. The first one is the company itself, referred to as the principal. The second party is the bonding company, also referred to as the surety or carrier. The third party is called the obligee. The obligee is the party that requires the business to be bonded. Here are two examples…

    Example #1: The Contractor – A contractor wants to do work for a local school. The Miller Act is a law that requires the contractor to post a bond to guarantee the work. If the contractor defaults, the surety would pay another contractor to finish the work.

    Example #2: The Auto Dealer – An auto dealer wants to obtain a license to sell vehicles in the state that he resides. The state licensing department requires that the auto dealer post a bond to guarantee that he will follow the states rules and regulations for selling vehicles. If the dealer were to be fraudulent, the victim could make a complaint to the state and the state could then file a claim on the bond to help the victim re-coop any moneys lost.

Some common bonding misconceptions
Getting your business bonded helps protect it – Not true, getting your business bonded actually protects your clients! If a claim arises, the surety will look to your company for repayment.

Everyone qualifies for bonding – Not everyone qualifies for surety bonding. True surety underwriting makes it so that only the most financially sound and responsible companies qualify for bonding (However, most do these days with the variety of programs available).

Everyone gets the same rate – Rates can vary greatly and can be changed due to your credit score, company’s financial strength, or what the bond is actually guaranteeing.

If you are in need of a bond, you may want to read our last article, How To Become Bonded. It highlights some of our best articles to tell you how to get the best rate for your bond and what you need to do to ensure you qualify.

How To Become Bonded

Today we are going to get back to the basics of bonding. We will go over what it means to be bonded and more importantly how to become bonded. We have gone over everything you need to know about surety bonding in previous articles. Therefore, we will highlight these standout articles rather than try to reinvent the wheel.

What Is A Surety Bond? – Learn what a surety bond actually is. You may be surprised to find out that they do not protect you whatsoever, but are a guarantee that is a form of credit.

How To Qualify For A Surety Bond – Not everyone qualifies to be bonded. Learn what you can do to ensure you are “bondable”. Reading this article will not only ensure that you get bonded, but also that you get the best possible rate!

Surety Companies: How To Choose The Best One For You – Bonding companies can vary on rates and underwriting practices. Find out what differences there are and how to go about finding the right carrier for your needs.


The process of becoming bonded is pretty striaghtforward:

1. Find out bond requirements
2. Apply for a bond online
3. Get approved
4. Sign indemnity agreement
5. Pay premium
6. Sign bond and send to obligee

If you read all of the articles above you will be well on your way to knowing what you need to do to become bonded. You can also use our insurance bond guide to make sure you obtain the right bond insurance.

When you are ready, you can apply for the bond type you need.