Surety bonds and fidelity bonds

Help protect the interests of your growing business.

What is a surety bond?

A surety bond is a binding contract between three parties: the principal (you or your business), the surety (State Farm), and the obligee (the customer/entity requiring the bond). The surety guarantees to an obligee that the principal will act in accordance with the terms of the bond.

You may be obligated to provide a bond as part of a business license or contract requirement. Being bonded may also help you attract new business. Potential clients might take comfort in knowing they will be protected by it.

Why you may need a surety bond

Surety bonds are often required of businesses or professionals who provide services to customers. These bonds are meant to ensure the business or professional will do their work in accordance with the licensing laws and other regulations.

  • As a business owner, you may need a surety bond to guarantee payment for state sales taxes or utility bills.
  • If you’re the administrator or executor of an estate, a bond may be required to ensure that you faithfully execute your fiduciary duties in accordance with the law.
  • Notary publics are required to post bonds in most states.
What are the different types of surety bond?

We offer far more types of surety bonds than we can possibly list here. So, we’ll only highlight the more common ones:

These bonds may be required for your business to be properly licensed in a given city, county, or state. License and permit bonds are meant to ensure that the work done by your business will be in compliance with specific state and municipal laws.

Types of license and permit bonds you may need:

  • Electrician's license bond
  • Plumber's license bond
  • HVAC contractor’s license bond
  • General contractor's license bond
  • Driveway permit bond
  • Sign permit bond

Public officials, particularly ones responsible for handling public funds, are usually required to provide a bond that guarantees they will faithfully and honestly perform their duties while in office.

Positions requiring public official bonding can include:

  • Notaries
  • Treasurers
  • Tax Collectors
  • Sheriffs
  • Judges

If you are appointed an administrator, executor, guardian, conservator or trustee, you may be required to get a probate bond before executing your duties. A probate bond guarantees an honest accounting and faithful performance of duties by named fiduciary or trustees.

Common types of probate bonds include:

  • Administrator bonds
  • Executor bonds
  • Guardian bonds
  • Conservator bonds
  • Trustee bonds

Performance bonds are common in construction and real estate development. Owners or investors typically require developers to make sure that contractors or project managers secure performance bonds as a guarantee they will meet the obligations of the contract.

Common types of contract performance bonds include:

  • Bid bonds provide a guarantee to the project owner that the bidder will enter into a contract to complete the work if selected.
  • Performance bonds guarantee the contract will be completed according to its terms and conditions.
  • Payment bonds guarantee laborers, subcontractors, and materials suppliers get paid.

  • Tax bonds
  • Utility bonds
  • Lost security/lost instrument bonds
  • Union wage and welfare bonds

What is a fidelity bond?

Fidelity bonds are insurance policies that offer businesses protection against loss of money and securities caused by fraudulent or dishonest acts committed by employees.

Common types of fidelity bonds include:

  • ERISA bonds were created as part of the Employment Retirement Income Security Act. They are insurance policies that protect retirement plans against losses that result from fraud or dishonesty.
  • Business services bonds protect your customers against acts of dishonesty or theft committed by you or your employees while working on the customer’s premises.
  • Condo and homeowners association bonds offer protection against dishonesty by employees, directors and officers, or others who have access to association funds.
  • Employee dishonesty bonds insure businesses against dishonest acts committed by their covered employees.
  • Non-profit organization bonds offer protection from dishonest acts of employees who have access to the organization’s funds.
Blanket vs. schedule fidelity bonds

Fidelity bonds also offer you the flexibility to cover specific employees or job positions (schedule bonds) or all employees (blanket bonds).

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Agent know-how

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We offer an array of coverage options that can be combined into one affordable policy.


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This is only a general description of coverages of the available types of business insurance and is not a statement of contract. Details of coverage, limits, or services may not be available for all business and vary in some states. All coverages are subject to the terms, provisions, exclusions, and conditions in the policy itself and in any endorsements. Contact a State Farm agent for more information and a customized quote.

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