The information below is intended to be very general in nature
and not to be construed to have any legal connotation.  
Contracts and Indemnity Agreements are legally binding and
enforceable documents and we highly recommend the use of
legal counsel.

What is a surety bond?
Simply put, a surety bond is a form of performance and
payment guaranty given by a Principal (Obligor) to an owner
or general contractor (Obligee).  For more detailed
information visit:  

What is an “Instant Issue” bond?        
In part the name “Instant Issue” is a misnomer.  Instant Issue
bonds are programs set up by underwriting sureties to issue
contract and permit bonds on a credit qualifying basis.  That is,
they utilize credit scores as a guide to approving a bond
request.  Depending on the type of bond and risk associated
with the bond additional information may be requested by the
surety before they approve or deny the request.  Usually, the
turnaround time is approx. 2 days.

How much does a bond cost?        
Bond rates (premium) are established by each surety.  They
can vary from 1% to 10%.  However, most
permit/performance bonds will be in the 2% to 3% range.  The
premium is an annual cost until the bond is released by the

How long is a bond good for?        
Most bonds associated with permit/performance obligations
are continuous in nature.  That is, they stay in effect until
performance of the obligation is completed and accepted by
the Obligee.  The obligation under a bond is tied to the
agreement entered into with another party.  So, if the agreement
states, for example, that the work or obligation must be
performed within a certain time then, a default under the bond
might occur should you not comply with the time provision or
obtain an extension of time in writing from the Obligee.

What is an Indemnity?        
Again, in very general terms, an indemnity is an obligation by
a third party or the applicant to hold the surety harmless should
a default occur under the terms of the obligation or the
provisions of the indemnity itself.  Always read and
understand the terms of an Indemnity Agreement.  And, if you
have questions, by all means ask the surety and seek legal
Hren Surety Insurance Services
specializing in subdivision and contract bonds
Lic. # OF06694
P.O. Box 599, Pauma Valley, CA  92061      Phone: (760) 742-3768  Fax: (760) 742-3769
Updated: August 20th, 2008
Member of the
Building Industry Association
of San Diego