Question 1

What is a surety bond?

Accepted Answer

A surety bond is a three-party agreement between the principal (contractor), the obligee (project owner or government), and the surety (insurance company). The surety guarantees the principal's performance to the obligee - without requiring the principal to deposit cash as security.

Question 2

How is a surety bond different from insurance?

Accepted Answer

Insurance compensates the insured for losses. A surety bond compensates the obligee if the principal defaults - and then seeks reimbursement from the principal. The principal is always financially responsible for the underlying obligation.

Question 3

Is a surety bond a loan?

Accepted Answer

No. A surety bond is not a loan and does not create a repayment obligation unless the surety pays a claim. The premium paid is a service fee, not interest on borrowed funds.

Question 4

How much does a surety bond cost?

Accepted Answer

Premiums typically range from 0.5–3% per annum of the bond amount, depending on your credit profile, bond type, tenure and project risk. Use our free calculator for an indicative comparison.

Question 5

Do I need good credit to get a surety bond?

Accepted Answer

Surety underwriting is holistic. We consider your financial statements, net worth, track record, management experience, and current contract load - not just a credit score. Contractors with strong project histories and healthy financials can qualify even without formal credit ratings.

Question 6

What documents do I need?

Accepted Answer

Typically: audited financial statements (2–3 years), company registration documents, PAN, GST certificate, bank statements (6 months), and a copy of your tender or contract. Your relationship manager will provide a precise checklist for your bond type.

Question 7

Is there a minimum or maximum bond amount?

Accepted Answer

The current IRDAI framework does not prescribe a percentage cap on contract coverage. The amount Assurety can arrange depends on the obligation, the applicant's financial profile, available insurer capacity, and underwriting approval.

Question 8

Are surety bonds accepted by CPWD and NHAI?

Accepted Answer

Insurance surety bonds are recognised under the General Financial Rules for Central Government bid and performance security, and NHAI has reported meaningful acceptance. The specific tender wording still controls, so we confirm the accepted instrument and format before issuance.

Question 9

What if my tender says 'bank guarantee only'?

Accepted Answer

Acceptance is a tender-document question. For Central Government procurement, GFR Rules 170 and 171 recognise insurance surety bonds at par with bank guarantees for bid and performance security. Ask the project authority for clarification before applying; we also verify the accepted wording for the specific tender.

Question 10

Which insurers underwrite Assurety's bonds?

Accepted Answer

Assurety arranges bonds only through IRDAI-licensed insurers approved for surety insurance business and with whom we have an active placement relationship. The proposed issuing insurer is disclosed before placement and remains subject to the obligee's acceptance requirements.

Question 11

How long does it take to get a surety bond?

Accepted Answer

First-time applicants typically receive bonds within 5–7 working days of complete document submission. Repeat clients with pre-approved limits can receive issuance in 24–48 hours. Large or complex bonds may take longer.

Question 12

Can you issue a bond urgently?

Accepted Answer

Yes. Contact us directly and let us know your deadline. We prioritise urgent cases and will advise whether expedited issuance is possible given your profile and bond type.

Question 13

What happens at bond renewal?

Accepted Answer

Your relationship manager proactively contacts you before your bond's expiry. Renewal typically requires updated financial documents and is completed within 2–3 business days for existing clients.

Question 14

What happens if a claim is made on my bond?

Accepted Answer

The surety investigates the claim before making any payment. This investigation protects contractors from unjust forfeiture - a significant advantage over unconditional bank guarantees. If the claim is valid, the surety pays the obligee and seeks reimbursement from you.

Question 15

How does the claims process protect me vs a bank guarantee?

Accepted Answer

An unconditional bank guarantee pays the obligee on demand - no investigation, no recourse. A surety bond includes an investigative process that requires the obligee to substantiate the claim. This gives contractors meaningful protection against disputed or unjust calls.

Surety bond questions, answered.

Start with the essentials.

Basics

Costs & Eligibility

Government Acceptance

Process & Timeline

Claims

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