Who Pays for a Surety Bond?
The principal usually purchases the bond, even when a contract allows the cost to be included in project pricing.
The principal, the person or business whose obligation is guaranteed, normally applies for the bond and pays the premium. The obligee requires the bond and receives its protection but does not usually purchase it for the principal.
License and permit bonds
A business typically treats the premium as part of the cost of obtaining or maintaining the license or permit. The bond should be issued in the exact legal name and amount required by the agency.
Contract bonds
A contractor may include bond costs in a bid or project price when the solicitation and contract allow it. That pricing decision does not change who is the principal on the bond or who signs the indemnity agreement.
Claims are different from premiums
Paying the premium does not transfer the principal's obligation to the surety. If the surety pays a valid claim, the principal may be required to reimburse the surety under the indemnity agreement.
Before you purchase a bond
- Get the current written requirement or bond form.
- Confirm the obligee, principal name, amount, term, and filing method.
- Keep proof that the bond was accepted.
Need help placing the correct bond? Call 970-204-4553.
Official sources
Source review completed August 28, 2026. Requirements can change. Confirm the current form, amount, and filing instructions with the agency, court, or contract owner that requires the bond.