5 Cities Insurance
Surety Bonds for California Businesses and Contractors
A surety bond is a three-party guarantee — the principal (you), the obligee (the party requiring the bond), and the surety — that you will fulfill an obligation such as completing a contract or complying with a license. Bonds are not insurance: they protect the obligee, and you typically reimburse the surety for any claim paid.
Coverage line pending confirmation
This coverage line is shown for educational purposes. The agency is confirming its availability and authority before it is published as an offered line. Request a quote or ask a question and we will confirm what applies to your business.
Who may need this coverage
- Contractors required to furnish performance and payment bonds
- Businesses needing a license or permit bond
- Companies with court or probate bond requirements
- Vendors needing a commercial surety bond
What it may cover
Coverage depends on policy wording, exclusions, limits, and underwriting. The following are commonly addressed, subject to the policy terms:
- Contract performance and payment bonds
- License and permit bonds
- Court and fiduciary bonds
- Miscellaneous commercial bonds
Common exclusions and limitations
- The principal's own loss — bonds protect the obligee, not you
- Claims outside the bond's terms
- Penalties for non-completion beyond the bond penalty
Relevant optional endorsements
- Increased bond penalty
- Dual obligee or specific project forms
- Annual renewable bonds
Factors that may affect pricing
- Bond type and penalty amount
- Principal financial strength and experience
- Project or license specifics
- Claims history
Information typically needed to request a quote
- Bond type and obligee requirements
- Bond penalty amount
- Project or license details
- Business financials and experience
A realistic example
Situation: A contractor fails to complete a bonded project and the owner calls the bond.
How coverage may respond: The surety pays the obligee up to the bond penalty, and the principal reimburses the surety per the indemnity agreement.
FAQ
Surety Bonds questions
Explore Surety Bonds for your business
Request a quote with this coverage preselected, or ask a coverage question.