Understanding you surety & bond options.

A Surety Bond is a written instrument between three parties: principal, obligee and surety entity. There are two major categories of surety products — Contract and Commercial. Combined, the surety companies Gallagher engages writes over 50% of the total surety premiums in the United States. 

Our licensed representatives and bond production associates are all seasoned industry veterans with significant surety experience. These dedicated professionals will work with you to understand your needs, and strive every day to fulfill those needs in the most timely, efficient and cost-effective manner possible given the existing market conditions. Below are more detailed descriptions of the primary types of bonds:

Contract bonds are the most common forms of bonds associated with the construction industry. The federal government and most states mandate that publicly funded projects over a threshold dollar value must include some form of "guarantee" protecting the public's interest. This guarantee, usually a contract bond, assures that the selected contractor and its team of sub contractors and suppliers will complete the project as specified — on time, on budget and without lien or litigation. In addition, many private owners also elect to protect their interest by requiring such a guarantee.

Some of the most common forms of contract bonds are bid bonds, performance bonds and payment bonds. The bid bond guarantees that if the principal (contractor) is a low bidder and awarded the job, he or she will enter into a contract and provide the necessary performance and payment bonds. Under the performance bond, the surety entity is obligated to the obligee to ensure performance of the contract in accordance with the contract terms and specifications. The payment bond guarantees that the payments due to qualified claimants, in connection with work performed under the contract, will be paid as committed. (Generally, this includes subcontractors and suppliers as well as other parties, as required by statute or as included on the bond form.)

Gallagher Surety has access to write bonds for contractors of any size. Our customer portfolio includes established general contractors as well as those in the major trades and their suppliers. Other miscellaneous bonds commonly written to support the construction industry include wage and welfare bonds, license & permit bonds, highway and roadway access bonds and various preservation bonds.

The major categories of commercial bonds include:

  • License & Permit Bonds
  • Court Bonds
  • Financial Guaranty
  • Public Official Bonds
  • Supply & Install Bonds
  • Indemnity Bonds

An explanation of these unique types of surety bonds are outlined below.

These bonds are required by the federal, state or local government as a condition to engage in a business activity or in the granting of a permit to exercise a particular privilege, and guarantee compliance with statutes, ordinances and departmental rules. Virtually all license and permit bonds guarantee compliance with laws, ordinances or departmental rules. Some also include guarantees for payment of monies (such as taxes, fees, or fines) or for performance of contracts. There are generally four general categories of license and permit bonds. A brief summary of each type follows.


These bond forms are usually generic in nature, simple and straightforward. Most refer to a specific license (for example an electrician or plumber) and guarantee only that the principal will comply with the rules pertaining to their license and trade. These rules usually address building code adherence, customer fraud prevention measures and procedural compliance. The bond refers to ordinances or rules, and these bonds are usually easily written.

Third-Party Suit

Some bonds also allow individuals to file a claim on the bond. Any type of license and permit bond can include third-party suit provisions. Although the responsibilities of the principal are no different, these bonds are considered more complex for the surety company because any individual may file a claim on their own initiative rather than making their complaint with the licensing office of the governmental body.

Compliance with Financial Guarantee

These bonds include guarantees that the principal will make payments to the obligee, typically of fees, fines and taxes required by ordinance and associated with the principal's license or permit. These bonds are also considered more risky for the surety company – which will typically examine an obligee’s financial statements and credit histories prior to issuing such a bond.

Compliance with Performance

These bonds also include a blanket performance bond, guaranteeing to all customers of the principal that all contracts will be performed in full accordance with contract terms. Typically, these are much more expensive than other types of license and permit bonds. The underwriting process is also much more involved and includes reference checks. Note that the mere presence of the word "perform" within the bond form does not necessarily mean that the bond includes contract performance guarantees. In most cases, the specific wording of the bond form dictates the required degree of underwriting. There are hundreds of bonds in this class. Contact us if the bond you require is not listed.

  • Alcohol, Tobacco, Firearms (ATF) Bond
  • Auctioneers (Other than Livestock) Bond
  • Collection Agency Bond
  • Contractor License & Permit Bond (City & State, including the new City of Chicago Contractor License & Permit Bond)
  • Contractors Tax Bond
  • Defective or Lost Title & Motor Vehicle Bond
  • Detective Agency Bond
  • Employment Agency Bond
  • Fuel Dealer Bond
  • Fuel Tax Bond
  • Grain Dealer/Warehouse Bond
  • Highway & Street Permit Bond/Excess Weight Bond
  • Hunting & Fishing License Dealer Bond
  • Insurance Adjusters/Public Adjusters/Brokers Bond
  • Manufactured Home Dealers (If Warranty Offered) Bond
  • Manufactured Home Dealers (If No Warranty Offered) Bond
  • Mortgage Broker Bond
  • Mortgage Lender Bond
  • Motor Vehicle Dealer Bond
  • Nursing Home Patient Trust Bond
  • Pawn Broker Bond
  • Private Schools Bond
  • Professional Fundraisers/Solicitors Bond
  • Public Warehouse Bond
  • Real Estate Broker Bond
  • Sales and Use Tax Bond
  • Toll Road and Turnpike Authority Bond
  • Union Benefits Guarantee Bond
  • Union Wage & Benefits Guarantee Bond (Wage and Welfare Bond)
  • Utility Deposit Bond

All Court Bonds guarantee payment in actions at law either for costs and damages or for judgment. This broad category includes bonds for plaintiffs and defendants.

  • Appeal Bond or Supersedas Bond
  • Court costs bond
  • Discharge mechanics lien (no performance/payment) bond
  • Eviction bond
  • Garnishment - both plaintiff and defendant bond
  • Indemnity to sheriff bond
  • Injunction bond
  • Replevin bond
  • Attachment bond, both plaintiff and defendant

These bonds are generally required by law or by order of a court for persons or businesses managing the estate or property of another. The surety guarantees the faithful performance of duties and compliance with orders of the court governing actions of the fiduciary.

  • Administrator Bond
  • Trustee Bond
  • ERISA/401(k) Trustee Bond
  • Executor Bond
  • Guardian Bond
  • Bankruptcy Bond

These bonds cover the official's term of office and guarantee that the bonded official will faithfully perform the duties of his or her office.

  • Sheriff's bond
  • City and town bond
  • County clerks bond
  • Tax collector's bond
  • Treasurer bond
  • Manager bond

These bonds are required by law. Principals under these bonds are typically importers or exporters of articles subject to import or other charges and taxes, custom brokers, or proprietors of warehouses licensed by the U.S. Custom Service. There are also Indemnity Bonds not mentioned below that are required by law or regulation or between private parties to guarantee some type of contract or payment obligation or to facilitate business transactions. The Customs Bond will take the form of either a single-entry or continuous bond, and within it, the surety companies guarantees the principal will:

  1. Comply with applicable laws and regulations of the U.S. Custom Bond Service.
  2. Pay all duties, taxes, fees, charges or forfeitures.
  3. Redeliver any goods which Customs subsequently determines were illegally imported.