Surety Bonds
What is a surety bond and how does it work?
A surety bond consists of three parties:
- Principal: the business or individual required to purchase and file the bond
- Surety Company: the licensed insurer providing the financial guarantee
- Obligee: the government agency requiring the bond
A surety bond is a financial guarantee to an interested party (usually a government agency) that a named person or business, the “Principal”, will act in accordance with certain laws. If those terms are broken, the harmed party can make a claim on the surety bond to recover losses. In the case of a paid claim, the “Surety Company” has the right to reimbursement from the principal.
Ashton Agency has been writing surety bonds since 1968. We provide bonds across all 50 states, including auto dealer bonds and public adjuster bonds. Browse by type or state below, or contact us for a quote within one business day.
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Frequently Asked Questions About Surety Bonds
A surety bond is a three-party agreement: the Principal (you), the Surety Company (like Ashton Agency), and the Obligee (a government agency). Your bond guarantees you’ll comply with applicable laws. If you violate those terms, the Obligee can file a claim to recover losses.
Most surety bonds cost between 1% and 15% of the total bond amount, depending on the bond type, required coverage, and the applicant’s credit profile. For example, a $25,000 motor vehicle dealer bond might cost $250–$500 per year. Ashton Agency works to get you the lowest rate and provides quotes within one business day.
Insurance protects the policyholder from losses. A surety bond protects the Obligee (the party requiring the bond) — not the business that purchases it. If a claim is paid out on a surety bond, the surety company has the legal right to seek full reimbursement from the Principal. Surety bonds are more like a line of credit backed by a guarantee than traditional insurance.
Many states and industries require a surety bond as a condition of licensing. Common examples include motor vehicle dealers, public adjusters, mortgage brokers, contractors, and telecom companies. Requirements vary by state and license type — browse our full bond catalog to find what applies to your business.
Most applicants get a quote within one business day. Standard bonds — including dealer and contractor bonds — are often issued same-day once your application is approved.
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