Frequently Asked Questions

A bond is a three-way party agreement between the Surety, the Principal (who is the contractor or applicant) and the Obligee. The Surety is the party positioned behind the performance of the Principal. The Surety has evaluated the Principal’s ability and willingness to perform and is providing their stamp of approval with a bond. If the Principal is unable to satisfy the terms of their agreement, the Surety assumes the responsibility and reimburses the Obligee.

Obligee is a formal word for a beneficiary who might be the project owner, government agency, etc.

Bonds are considered a specialty form of insurance, and the Surety is usually an insurance company. Surety bonds are very different than insurance, however, because the beneficiary is a third party. As long as the Principal does what is promised, the Surety will not be called upon to perform or pay. The Principal is the primary responsible party under the bond and is obligated to reimburse the Surety for any claims or expenses incurred by the surety if the Principal has not lived up to their agreement.

The Obligee is the beneficiary under a surety bond. If the Principal cannot or will not perform, the Surety steps in and makes good on the Principal’s obligation. The Obligee also has an obligation under the bond. If the Obligee fails to fulfill their responsibilities under the contract or agreement neither the Principal nor Surety has any liability.

The indemnity agreement is a legal document that fully discloses the Principal’s obligations in a surety relationship and provides for the Surety to recover any losses paid out on behalf of a Principal. The Principal is the primary responsible party under the bond and to reimburse the Surety for any claims or expenses they incurred if the Principal has not lived up to their agreement.

Bonds can be required either by law or contract. Bonds can be divided into the following broad categories: Contract, Commercial, Court, Fidelity, License & Permit, Federal, Public Official, and Miscellaneous.

Circular 570: Federal Treasury Listing of Qualified Sureties, also known as the T-list, provides a list of all surety companies qualified to write bonds on federal contracts. Access the T-list online at

Surety companies give paper Power of Attorney to their appointed independent insurance agents to allow the agent to act on the behalf of the Surety to bind coverage for them. AllStates Bonding has Power of Attorney with each surety company it represents. This allows our to clients get their bonds within 24 hours of the time they’re requested.

The Surety’s claim department will conduct an investigation as quickly as possible to avoid any further damages and mitigate their exposure. It is important to note that, as the Principal under a bond, a pending claim does not necessarily mean there will be a financial loss incurred since the dispute may not even be legitimate. If the Surety does determine through their examination that the claim is valid, the Principal will be reminded of their obligations under the indemnity agreement and given the opportunity to satisfy the claim first. If the Principal fails to respond, the Surety will arrange settlement with the Obligee and implement collection proceedings against the Principal.

Most large property and casualty insurance companies have surety departments. In addition, there are some companies for which surety bonds make up all or most of their business. In either case, in order for a company to write a surety bond in the United States, it must be licensed by the insurance department of one or more states. Although there are some exceptions, generally a surety company must be licensed in the state in which it is doing business or by the state where the obligation guaranteed by the bond is being performed. ALL STATES BONDING ONLY WORKS WITH REPUTABLE SURETY COMPANIES. Each of the over 15 bonding companies All States Bonding works with are either certified by the United States Department of the Treasury (known as “T-listed”) and/or AM Bests Rated “A” or better. All of our surety companies are in good standing with their respective state insurances departments.

Depending on the amount and the type of bond requested, surety underwriters may evaluate financial information, detailed credit history of the business and its principal owners, as well as management’s experience. Based on the Surety’s expert decision making ability, they will not only be able to assess a Principal’s ability to pay or perform an agreement, but the Surety will also be able to determine the Principal’s willingness to fulfill their promise. The process can be time-consuming and frustrating for the customer looking for a bond especially first time users of bonds. AllStates Bonding has streamlined this process to the point where new bond requests can be turned around in under 48 hours. You have our GUARANTEE on that!

Why Choose AllStates Bonding?

We provide the most competitive bond program in the industry.

If you’re not getting your BONDS with us there is a good chance you’re competing with someone who is – and they are getting better terms, including better rates than you are.

We are 100% focused on Surety Bonds

Unlike most insurance agents, we concentrate all of our time, talents, resources and efforts on surety bonds.

Over 25 years of experience in the Surety industry

Each partner has been in the surety industry for over 25 years, including managerial experience in the underwriting departments of major surety companies.

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