If the contractor defaults, the owner can call on the surety. The surety may pay for completion or arrange another contractor, depending on the bond terms.
Owners require performance bonds from general contractors on most public work. General contractors sometimes require them from subcontractors with large contracts.
Check the front-end documents and the subcontract for a bond requirement that applies to you. If one applies, get the premium from your surety agent and include it in your price. Requirements differ by owner and by state, so check the bid documents.