Agents Guide to Surety Bond Types, Placements, & Best Practices

What Are Surety Bonds and Why Should Insurance Agents Offer Them?

Surety bonds are three-party guarantees that insurance agents help their clients obtain to satisfy their licensing, contracting, or fiduciary requirements. As a surety bond broker, BOSS Bonds helps connect agents to multiple carriers via our SuretyBonds.Market portal, enabling them to cross-sell bonds, boost their revenue, and simplify their clients’ compliance.

A surety bond is a three-party financial agreement between a:

Principal – The client who needs to purchase the bond (contractor, auto dealer, executor, etc.).
Obligee – The entity requiring the bond, such as a state agency, project owner, or court.
Surety – The bonding company that guarantees the principal’s obligations.

As a property and casualty (P&C) insurance agent, you play a crucial role in matching your clients with suitable surety carriers. Providing bonding services also allows you to enjoy:

New revenue streams – Surety bond placements enable you to earn commission income without incurring significant overhead.
Stronger client retention – From contractors to business owners, many of your clients will be more loyal to your agency if you can satisfy their insurance and bonding needs in-house.
Differentiation – Providing surety bonds positions you as a full-service risk management agency, setting you apart from those who only offer traditional P&C coverage.

3 Core Types of Surety Bonds That Agents Place

Surety bonds come in many forms. However, P&C agents typically place bonds that fall within the following categories:

#1 Contract Bonds

Contract bonds are designed to protect various stakeholders during construction projects. Some common types include:

Bid bonds, which ensure that contractors honor their bids if awarded the job.
Performance bonds, which guarantee that a contractor completes the project according to its contract terms.
Payment bonds, which protect subcontractors and suppliers by ensuring timely payments.

Learn More: 6 Types of Bonds Your Contractor Client Might Encounter

#2 Commercial Bonds

State or local governments often require businesses and individuals to purchase commercial bonds to obtain their licenses, fulfill legal obligations, and ensure regulatory compliance. Here are just a few examples:

License & permit bonds, which include auto dealer bonds, mortgage broker bonds, and contractor license bonds. These bonds protect consumers and governing agencies by ensuring bonded professionals operate honestly and in accordance with the law.
Court bonds, which encompass probate bonds, guardianship bonds, appeal bonds, and injunction bonds. These bonds guarantee that individuals involved in legal proceedings will fulfill their court-ordered obligations, thereby protecting estates, beneficiaries, and opposing parties from financial harm.
Miscellaneous bonds, which cover bonds that are tailored to unique obligations, such as fuel tax bonds.

Learn More: 10 Most Common Questions About Commercial Surety Bonds Answered

#3 Fidelity & Service Bonds

Fidelity and service bonds protect business owners and their customers against losses caused by an employee or service provider’s dishonesty or misconduct. Some bonds that fall within this category include:

Employee dishonesty bonds, which protect customers against theft by a business’ employees.
Janitorial bonds, which reassure customers of cleaning service businesses that any losses due to theft or dishonesty will be covered.
Title bonds, which allow principals to establish ownership rights of real estate or vehicles when their title documentation is missing and protect future claimants who may challenge that ownership.

How to Source & Quote Surety Bonds as an Agent

If you want to reap the benefits of cross-selling surety bonds, from higher revenues to stronger client loyalty, you simply need to source them and provide quotes for your clients.

Generally speaking, you need to follow these steps:

Gather your clients’ data – When a client needs a surety bond, ask them to gather their financial information, credit history, resumes, and relevant project experience. Underwriting requirements vary by bond type; knowing the general requirements in advance saves time for you and your client.
Check carriers’ appetites – Not every surety company writes every type of bond. Thus, you need to find a carrier that offers the specific bond type and capacity your client requires, so you can quickly match clients with the right markets.
Compare quotes and structure markups – Next, present the various bond options to your clients, highlighting each one’s premium, terms and conditions, and service details. You can also discuss your commission fee at this time.
Use instant-issue portals – Platforms like SuretyBonds.Market allow you to quote and issue bonds instantly. They also provide client-facing portals and back-office support.

Partnering with BOSS Bonds means we do most of this work for you. Get specialized surety expertise with 25+ surety carrier relationships and an understanding of their appetites, plus access to SuretyBonds.Market—an online portal with streamlined applications for you to manage your bonds with full transparency.

5 Common Mistakes P&C Agents Make—and How to Avoid Them

Many P&C agents misunderstand the role of surety bonds. Here are some common mistakes you’ll want to avoid when you start offering them:

Treating bonds like insurance – Unlike insurance, surety bonds protect the obligee, not the client. Educating clients on this distinction is essential.
Failing to educate clients – Contractors or business owners may not realize why they need surety bonds. Explaining their value can build trust and enhance transparency.
Choosing the wrong surety partner – Not every surety has the same appetite, rates, or approval speed. By partnering with a reputable broker, you can gain access to more carriers and better serve your clients.
Overcomplicating the process – Surety clients want fast approvals. Thus, you need to offer quick quotes and stress-free applications to ensure their satisfaction.
Not offering bonds at all – If you don’t offer surety bonds, your clients may go elsewhere—and take their P&C business with them.

Learn More: Common Mistakes P&C Agents Make with Surety Bonds & How to Avoid Them

State-Specific Licensing & Bond Requirements

Every state has distinct bonding requirements. For example, many state licensing authorities require applicants to purchase bonds before issuing their permits or registrations. Here are just a few state-specific examples:

California

Insurance brokers in California must post a $10,000 surety bond to qualify for a personal‑lines broker‑agent license from the Department of Insurance. Meanwhile, surplus-line brokers must secure a $50,000 surety bond due to the higher risk and complexity of their specialty insurance placements.

Texas

The Texas Department of Insurance (TDI) requires insurance agents to post a $25,000 surety bond to obtain their registration. Similarly, agents pursuing a resident individual public insurance adjuster license must submit a $10,000 surety bond during their application process.

Florida

Florida’s Department of Financial Services requires public adjusters to secure a $50,000 fidelity bond to guarantee their adherence to public adjuster laws. Title insurance agencies have similar bonding requirements—they must post a surety bond of at least $35,000 made payable to the title insurers that appoint them.

Georgia

In Georgia, used motor vehicle dealers must secure a $35,000 surety bond, while dealerships dealing in used auto parts only need a $10,000 surety bond. These requirements are set by the Georgia Secretary of State.

Best Practices for Selling Surety Bonds as an Insurance Agent

If you want to build a scalable bond business within your insurance agency, just follow these steps:

Establish a dedicated surety desk and workflows – Ensure your surety-side staff know how to intake and process bond requests efficiently.
Partner with surety carriers through your broker – If you partner with BOSS Bonds, you can access over 25 carriers across the country and secure competitive rates for your clients.
Train your team on bond types, state rules, and client communication – Educating your staff will ensure your clients receive accurate guidance and comprehensive support.
Stay current on legislation and industry trends – State-specific bonding rules and required amounts can change, so it’s important to stay informed on evolving legislation.

Frequently Asked Questions (FAQ)

Q: What information do I need to request a quote?

A: Depending on the type, most bonds simply require some basic personal or business information, financial history, job details, or court documents.

Q: How quickly can my client get a bond?

Some bonds can be issued instantly through SuretyBonds.Market. Others may require a closer financial review. These can often be approved within 24 to 48 hours.

Q: Can I place bonds outside my state?

A: Yes. With BOSS Bonds, you can place bonds in all 50 states through our nationwide carrier network.

Q: How are claims handled once a bond is active?

A: If a claim is filed, the surety will conduct an investigation and pay valid claims to the obligee. After that, your bonded client will need to reimburse the surety.