Surety bonds are not insurance policies, but rather financial instruments that provide a guarantee or assurance of performance or payment between parties involved in a contractual agreement. However, certain insurance coverages may be associated with surety bonds. Here are some insurance coverages that are typically involved in the context of surety bonds:

  1. Commercial General Liability Insurance: Commercial general liability insurance is a common coverage that businesses obtain to protect against claims of bodily injury, property damage, or personal injury. In the context of surety bonds, some obligees (the party requesting the bond) may require the principal (the party obtaining the bond) to carry commercial general liability insurance to supplement the bond coverage.
  2. Professional Liability Insurance: Professional liability insurance, also known as errors and omissions (E&O) insurance, may be required for professionals who are obtaining surety bonds. This coverage protects professionals from claims of negligence, errors, or omissions in the services they provide.
  3. Property Insurance: Property insurance protects against physical damage or loss to the property owned or used by the principal. Although property insurance is not directly related to the surety bond itself, it may be required by the obligee to ensure that the principal has adequate protection for their assets.

Workers’ Compensation Insurance: Workers’ compensation insurance is typically required by law and provides coverage for medical expenses, rehabilitation costs, and lost wages for employees who suffer work-related injuries or illnesses. Although workers’ compensation insurance is not directly tied to the surety bond, it may be a requirement for the principal to demonstrate that they have proper insurance coverage for their employees.