A surety bond, sometimes referred to as bonding insurance, is a guarantee to your clients and customers that your business will fulfill the terms of a contract. It is issued by a surety, a business that underwrites the bond. If you are unable to complete agreed-upon work for a client, they can make a claim against your surety bond to be compensated for their financial losses. However, you will then be expected to reimburse the surety for paying the claim.