Which type of projects typically require surety bonds?

Government contracts typically require surety bonds because they ensure that obligations to the government are met. This requirement protects the public interest by ensuring that construction projects or other services funded by taxpayer dollars are completed as per the contract specifications. Surety bonds provide a financial guarantee that the contractor will perform their duties according to the terms of the contract. If the contractor fails to do so, the surety bond can be called upon to compensate the government for losses incurred, ensuring that projects are completed, which is crucial for maintaining public infrastructure and services.

In other contexts, such as private residential building projects, retail business licenses, or freelance contract work, surety bonds are generally not required. These projects often involve private agreements where the risk is managed differently, and the necessity for a bond is less prevalent. Hence, while surety bonds are critical for large-scale and government-related projects, they are not a standard requirement for smaller or more private endeavors.