Updated 2026-11-01
When you buy a surety bond you do not pay the bond amount. You pay a premium to the surety, which is usually a percentage of the bond amount. The percentage depends on how likely the surety thinks it is to pay a claim, and how likely it is to be repaid if it does.
Factors sureties weigh
- Bond type. Some bonds rarely have claims; others, such as bonds guaranteeing payment of money, carry more risk.
- Bond amount. Set by the obligee. Larger amounts mean more exposure.
- Personal credit. For many license and permit bonds, the owner's credit is the main underwriting factor.
- Financial statements. For contractor performance and payment bonds, sureties review company financials, work in progress and experience.
- Claim history. Prior bond claims weigh heavily.
Why indemnity matters
Most sureties require the principal, and often the owners personally, to sign an indemnity agreement. If the surety pays a valid claim, it seeks repayment from the indemnitors. That is the key difference between a bond and insurance; see surety bond vs insurance.
Tips for applying
Use the exact legal name, have the obligee's form ready, and answer financial questions completely. Incomplete applications slow underwriting more than anything else. The bond types page helps you identify the right family.