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Surety Bonds and Fidelity Bonds

A fidelity bond or surety bond can help protect the interests of your growing business. At State Farm®, we combine the financial strength of our full service commercial Surety and Fidelity Bond Department along with more than 18,000 local agents to provide you and your business professional with superior service.

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Surety Bond

Why do I need a surety bond for my business?

  • As a business owner, you may need a surety bond to guarantee payment for state sales taxes or utility bills.
  • Or as a contractor, you may need to post a license or permit bond to guarantee your work for licensing requirements with municipalities.
  • Attorneys may have clients that are required to post court bonds such as administrators or executors bonds to guarantee their performance while distributing assets in estate situations.
  • Notary publics are required to post bonds in most states.

Discover the ways you can protect yourself, your small business, and your employees with the help of State Farm.

Types of Surety Bonds


License bonds guarantee the Principal will comply with applicable codes and regulations established by the Obligee (The Obligee is usually a government entity such as a City, Town, or State).

Types include:

  • Electrician's license
  • Plumber's license
  • General Contractor's license
  • Driveway permit
  • Sign permit
  • Sales tax

Example: Electrical contractors may be required to post a bond as part of their licensing requirements. The obligation of the bond may specify that the contractor will follow the electrical codes established in that city, town, or municipality.



A Public Official bond guarantees that elected or appointed officials will faithfully perform their duties. The bond amount, as well as duties, are usually specified by statute or ordinance.

Types include:

  • Treasurers
  • Tax Collectors
  • Peace Officers
  • Judges
  • Notaries


A probate bond guarantees an honest accounting and faithful performance of duties by fiduciaries/trustees. These bonds are required by courts or statutes as estates of deceased persons, incompetent persons, and minors are set up and administered.

Types include:

  • Administrator
  • Executor
  • Guardian
  • Conservator
  • Trustee

Other types of judicial bonds include:

  • Appeal
  • Injunction
  • Attachment bonds
  • Release of lien


Miscellaneous surety bonds include:

  • Utility payment guarantees
  • Lost Security/Lost Instruments (cashier's check, stock certificates, and municipal bonds)
  • Union Wage and Welfare


Contract bonds generally guarantee the performance of a written contract according to its terms and conditions.

Types of Contract Bonds include:

  • Bid bond
  • Performance bond
  • Payment bond

A bid bond guarantees that if a contractor is the low bidder on a project, he/she will enter into a contract and provide a performance bond.

A performance bond guarantees the contract will be completed according to its terms and conditions.

A payment bond guarantees payment of laborers, subcontractors, and material suppliers.


Fidelity Bond Policies — Blanket/Schedule

Types of Fidelity Bonds


  • Blanket fidelity bonds provide the insured with coverage for covered property as a result of "employee dishonesty." Fidelity bonds provide the insured with employee dishonesty coverage for all of its "employees" unless specifically excluded.
  • Generally, new employees are automatically covered
  • All employees are covered for the same aggregate amount
  • Limit of liability applies "per occurrence" as defined in the policy
  • Common uses for a blanket bond include:
    • Businesses with large numbers of employees
    • Businesses with frequent employee turnover
    • Organizations with voluntary or honorary positions (not for profit associations)


  • Schedule fidelity bonds may be used in businesses where employees tend to have greater responsibilities combined with the handling of larger sums of money (real estate managers, bookkeepers, office managers, etc.)
  • Provides the insured "employee dishonesty" coverage for selected employees
  • Covered employees will be scheduled or named by position
  • Employees can be covered for different amounts
  • Limit of liability is per name/position scheduled

Disclosure

This is only a general description of coverages of the available types of insurance and is not a statement of contract. Details of coverage, limits or services may not be available for all businesses and vary in some states. All coverages are subject to the terms, provisions, exclusions and conditions in the policy itself and in any endorsements.

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