Surety

A surety is a third-party company—typically an insurance or bonding firm—that guarantees a contractor’s obligations. When a contractor buys a bond, the surety promises to step in and cover losses if the contractor fails to follow the law, mishandles payments, or doesn’t complete the work.

In practical terms: the surety backs the contractor financially. If the contractor can’t make things right, the surety pays the homeowner (up to the bond amount) and then seeks reimbursement from the contractor.