Who is responsible for paying the surety bond premium?

The principal is responsible for paying the surety bond premium because the principal is the party that obtains the bond and benefits from it by ensuring compliance with the obligations outlined in the bond agreement. The premium is essentially a fee for the surety company’s promise to back the principal's performance or compliance. It serves as a form of payment for the risk the surety company takes by issuing the bond.

In surety bond agreements, the relationship established is between the surety, the principal, and the obligee. While the obligee benefits from the bond as a form of protection against the principal's potential failures, it is the principal who is contractually responsible for any costs associated with the bond, including the premium payment. The contractor option may seem related, but it is important to remember that not all principals are contractors; they can be individuals or businesses that have various obligations. The surety company has no responsibility to pay the premium for the bond, as they are the issuer receiving payment for assuming the risk.