A surety bond is a type of insurance coverage designed for companies and contractors who wish to guarantee their customers that they will fulfill their contract in accordance with the agreed terms. This coverage can include a payment guarantee, a performance guarantee, a bid bond, and so on.

In the event of a breach of contract, the insurance may cover the cost of completing the project, property damage caused by a contractor, legal costs associated with defending a lawsuit, and possibly more, depending on the coverage policy. Bonding encourages customer confidence in contractors and protects them against potential financial risks associated with their business activities.