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Surety 101

What Is a
Surety Bond?

A surety bond is a written agreement that guarantees compliance, payment, or performance. Unlike insurance, it's a three-party contract — the protection flows to a third party, not the one paying the premium.

01 — Principal
The Bonded Party

The business or individual who purchases the bond and commits to fulfilling an obligation. The principal is ultimately financially responsible if a claim is paid out.

02 — Surety
The Guarantor

The insurance or surety company that underwrites and guarantees the bond. If the principal fails, the surety pays the claim — then seeks reimbursement from the principal.

03 — Obligee
The Protected Party

The entity that requires the bond and receives its protection — typically a government agency, licensing board, or project owner.

Surety Bond vs. Insurance

Surety Bond
Three-party guarantee

A surety bond involves three parties — the principal, the obligee, and the surety. It ensures the principal fulfills their obligations to the obligee. If the principal fails, the surety steps in, then seeks reimbursement from the principal.

Insurance
Two-party indemnity

Insurance is a two-party contract between the insurer and the insured. It protects against losses from unforeseen events. The insurer absorbs covered losses — no repayment is required from the insured.

01Parties Involved
Surety Bond
3 Parties

Principal, Obligee, and Surety. This three-party structure is what fundamentally distinguishes surety bonds from all other financial instruments.

Insurance
2 Parties

Insurer and Insured. A direct two-party arrangement where the company offering coverage contracts with the individual or business buying the policy.

02Who Is Protected
Surety Bond
The Obligee

Protection flows to a third party — the obligee — from the risk of the principal failing to fulfill their contractual or regulatory obligations.

Insurance
The Insured

Protection flows to the policyholder themselves, covering them against financial losses from accidents, theft, natural disasters, and similar events.

03Purpose & Use
Surety Bond
Compliance & Performance

Required to ensure adherence to legal standards or contractual obligations — especially in construction, professional licensing, and regulated industries.

Insurance
Financial Risk Mitigation

Used broadly to protect against risk across health, life, property, and liability — serving as a safety net for individuals and businesses.

04Financial Responsibility
Surety Bond
Principal Must Repay

When the surety pays a claim, the principal is ultimately responsible for reimbursement. Surety bonds function as a form of credit extended to the principal.

Insurance
Insurer Absorbs the Loss

Insurance absorbs the financial impact of claims up to the policy limit. The insured is not required to repay the insurer for covered losses.

05Premiums & Costs
Surety Bond
A Service Fee for the Guarantee

Premiums are based on the perceived risk of the principal not fulfilling their obligations and the bond's total amount.

Insurance
A Cost for Transferring Risk

Premiums are determined by the likelihood and potential cost of insured risks, factoring in history, policy type, and coverage limits.

How It Works

Get Bonded in Four
Simple Steps.

Select the Bond You Need

Choose your state and bond type. Complete our brief underwriting form in under 5 minutes.

Instant Approval

Review your quote and submit. Our platform instantly evaluates and approves — no manual review, no waiting.

Secure Payment

Pay securely through our portal with credit or debit card. Fully encrypted and protected.

Bond Issued

Your policy document is emailed instantly. We'll also handle the filing with the obligee.

Why PHP Bonds

The Difference a Dedicated Broker Makes.

Same-Day Bond Placement

Through Propeller's platform, 98% of standard bond applications are placed and issued the same business day, often within minutes of submission.

Competitive Market Access

We submit your application across multiple carriers simultaneously, ensuring you receive the most competitive rate available, not just the first offer.

Expert Guidance

Not sure which bond you need? Our team has 25+ years of surety experience and will steer you toward the right bond type, amount, and carrier for your specific obligation.

Ongoing Account Management

Unlike direct platforms, you get a real broker managing your account. We handle renewals, track expiry dates, and are available when your obligee has questions.

Contact Us

Get Your Bond
Placed Today.

No commitment required. Tell us what you need and we'll handle the rest, advising, sourcing, placing, and delivering your bond through our platform.

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