Is The Principal Protected By A Surety Bond

Protection when it comes to Surety Bonding

As a contractor, professional or business owner, you’ll likely come across a situation, which requires you to obtain a surety bond. In this type of situations, you’ll want to know precisely how the surety bond behaves. Does the bond provide you with protection or is it only designed to deliver protection to other parties? Below, you’ll figure out.

Surety bonding PROtection


Many people believe that the surety bond protects the principal. This simply is not the case. Surety isn’t insurance and it doesn’t provide the principal with any protection whatsoever. However, this doesn’t mean that you should scoff at the idea of surety. The truth of the matter is that surety bonds can be very beneficial for all parties involved, including the principal! Of course, there are some specific types of bonds, which can provide the principal with a little bit of reassurance, when doing business with others.

Subcontractor Bond

Large development projects require the involvement of general contractors and subcontractors who are required to be licensed in Canada. Of course, the general contractor is the primary responsible member of the team. To ensure themselves that subcontractors and suppliers fulfill their end of the bargain, they require them to post a subcontractor surety bond. If at any time, the subcontractor falters on the terms of the contract, the general contractor can file a claim against the subcontractor’s surety bond. This is basically the only way that general contractors will be protected under a surety bond.

subcontractor bond

Who Is Protected?

Truthfully, there is an array of different people and groups, who may be protected by the surety. The specifics will vary depending on the bond in question. In many situations, the bond will protect the public. This is the case, when dealing with license bonds. On the flip side, construction bonds are primarily put in place to protect a property owner or project developer. Unfortunately, the principal usually doesn’t receive any protection.


At the end of the day, the majority of bonds will not protect the principal. However, it can offer these individuals with an array of other benefits. With this in mind, you should remember that the bonds are not only a requirement, but also they’re beneficial and cannot be neglected.

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