A surety bond (aka Guarantee or Bond) is a promise to be liable for the debt, default, or failure of another.

It is a three-party contract, the Surety (or Guarantor) guarantees the performance or obligations of a second party (the Principal) to a third party (the Obligee or Beneficiary).

Surety compensates the beneficiary for an event that should occur, non-occurrence may cause financial loss for the beneficiary.

Insurance compensates the beneficiary for an event that may occur, causing financial loss to policyholder.

Surety bonds are most commonly associated with the construction industry, however a

Surety guarantee can also be used as a substitute for many forms of Bank guarantees and Letters of credit.