A surety bond or surety is a promise by a surety or guarantor to pay one party (the obligee) a certain amount if a second party (the principal) fails to meet some obligation, such as fulfilling the terms of a contract. The obligee is typically a government agency that requires the bond to regulate industries and reduce the likelihood of financial loss. The surety, the insurance company, provides a line of credit in case the principal fails to fulfill the task.