What is a surety bond? A surety bond is an agreement or contract between three parties; the principal (the person buying the bond), the surety (the one who provides the bond) and the obligee (the one who is requiring the bond). Surety bonds offer protection to consumers from things like fraud or regulatory violations.

The most common surety bonds fall under a general term called, license bonds. These particular bonds are required by a federal entity, state or county, to guarantee that the principal will comply with all rules and regulations for their specific license.

In construction, there will be specific jobs that require a bond, while others may not. These bonds are required to guarantee that the principal, or the contractor hired to do a job, will complete the job as stated in the contract. However, if the principal does not, a claim will be filed and the surety will pay the obligee to finish the job and cover any damages or other costs incurred. The principal then pays off the claim against their bond to the surety.

Cost depends on multiple factors, such as; the type of bond, the amount of the bond, and the qualification of the applicant. The cost is heavily based on the applicant’s personal credit. Applicants with good personal credit can expect to pay 1% to 3% of the total bond amount, sometimes less. Applicants with less than perfect credit could pay between 2% to 10% and sometimes lower depending on the type of bond and the agency you use. We have programs for bad credit applicants where, in some cases, we don’t even look at credit. Apply here.

The first step is an application. Please apply by filling out an application. Once your application is received, reviewed and underwritten, a quote is provided and payment instructions sent. After you accept your quote and pay your premium, your bond is issued and ready for delivery. Once you receive your bond, you should sign where indicated and turn your bond into the obligee (person requiring the bond).

Generally, most bonds are issued within minutes of receiving payment. The application process should take less than 24 hours. Once we receive complete application data, it is a matter of hours before we are ready to issue and deliver a bond.

There is a difference between a surety bond company and an agency. Consumers don’t have access directly to surety companies. A surety company is a financial/insurance entity that offers surety credit to applicants via an agency. Most people online claim they are a “surety company”, but they are simply a broker or agent, representing multiple surety companies. It is important to select an agent that has both experience and good reviews. Also, find an agency that has “underwriting authority” or programs. Generally, these agencies will have better rates and quicker turnaround.

Usually, a person applying for a bond has been given a requirement that asks for a surety bond. Operating without a bond, when it is required, puts both you and consumers at risk. Staying bonded allows one peace of mind in regards to compliance and safety for their clients and consumers.

The principal buys a surety bond from the surety and pays a premium, or a percentage of the bond sum. In return, the surety extends the principal surety credit, similar to an unsecured loan; they guarantee that specific tasks are fulfilled. The obligee can make a claim to recover losses if the principal does fail to fulfill the task. If the claim is valid, the surety company will not exceed the bond amount in compensation and the principal will be held responsible to pay off the claim. If no claims arise the principal pays nothing but the bond premium.

Surety bonds are not insurance. They are an extension of credit. A surety company offers surety coverage to applicants mainly based on financial qualifications. In the event of a claim, the principal (applicant) is on the hook for the amount of the claim. States, cities, etc.

Require surety bonds from certain businesses/people to allow their consumers and others to have confidence in all their dealings with bonded businesses. It provides a guarantee that businesses will operate with integrity per the requirements provided by the oblige (entity requiring the bond).

Yes. Renewal payments for the bond are invoiced and due 30-60 days before the original bond expires. To avoid cancellation be sure to pay your renewal premium by the specified due date. Feel free to call 1-877-841-6745 with any questions.

Yes! Contract bonds (bid, performance, payment) are different than other types of license and permit bonds.  Contract bonds offer a guarantee that a contract will be completed (service of construction). License bonds (those that cover auto dealers, freight brokers, contracting licenses, etc.) guarantee that practitioners adhere to federal and local laws and other requirements that will protect consumers from physical and financial wrongdoings.