Excess Weight Length Bond

Excess Weight Length Bond


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Excess Weight Length Bond 101

While everyday drivers don’t usually have to worry about the weight or length of their car causing issues while they’re on the road, we’ve all driven past signs with weight and length limits on them. These limits exist to help protect our roads, bridges, and motorways. The point of an excess weight length bond is to indemnify the State Highway Department for any damages caused to property due to the carrying of excess loads or the excess length of trucks and trailers. 


Let’s take a closer look at what excess weight length bonds are, how they work, and what they cost. 

What Is an Excess Weight Permit Bond?

Most states require that carriers hold an excess weight length bond (also known as an oversize overweight permit bond) in order to legally operate in that state. Oftentimes posting an excess weight length bond is a requirement of the licensing process. 


This unique type of surety bond guarantees that carriers will pay for any damages they cause to state highways and roads. If the carrier fails to make payments after damage occurs, the state or local authorities can file a claim against the excess weight length bond.


An excess weight permit bond can help protect a variety of public entities, including:


  • Pavement

  • Structures

  • Roadways

  • Bridges

  • Drainage structure

How Do Excess Weight Permit Bonds Work?

There are three parties involved in an excess weight length bond: the surety, the principal, and the obligee. The principal is the party who needs the bond to become licensed (the carrier). The obligee is the party who requires the bond (this is usually several different state, county and municipal entities in the case of an excess weight permit bond). And the surety is the company who issues and backs the excess weight permit bond. 


So, what happens if a claim is filed against an excess weight permit bond? If a claim is filed against an excess weight permit bond, then the surety will investigate the validity of the claim. If the surety finds that the claim is valid, they will pay out the claim up to the bond amount. It’s important to clarify that a surety bond is not an insurance policy and just because the surety initially pays the claim amount to the claimant, the principal still owes that full amount. Instead of paying the claimant directly, the principal will pay the surety back. It’s ideal to avoid having claims filed due to the fact that the claim amount can be expensive and it can include additional fees and interest. 

How Much Does an Excess Weight Bond Cost?

If you’re wondering how much an excess weight permit bond costs, there are a few important terms you need to understand before we can explain how pricing works. 


To start, you have the bonding capacity. This is the highest claim amount anyone can file against the excess weight permit bond. If the bonding capacity is $50,000, then a claim can’t be filed for more than $50,000. If the bonding capacity is $20,000, then $20,000 is the highest possible claim. Buying an excess weight permit bond is not a one and done deal. You have to renew surety bonds at the end of their bond term (aka the period in which the surety bond is active). Finally, you have your bond premium, which is how much you will spend to hold the excess weight permit bond. 


Now, back to pricing. Typically, the bond premium is a set percentage of the bonding capacity. This percentage is usually fairly small and in the 1% to 5% range, but the rate you’re offered can vary greatly depending on a handful of different factors: 


  • Personal credit score. Your personal credit score is the most important pricing factor and the higher your credit score is, the lower your bond premium usually is. 

  • Business financial history and industry experience. The more industry experience you have, the more established your business is, and the more secure your business finances are, the smaller a percentage you’re likely to be offered.

  • Business credit score: Your business credit score can also be taken into account during the application process. 


To better understand how the bond premium works, let’s look at an example of how pricing can play out. 


If you have a great personal credit score and solid business history, you’re likely to be offered a small percentage. Say you need to pay 1% of the bonding capacity and the bonding capacity is $10,000. That means you will pay $100 to secure your excess weight bond. 


If you aren’t offered a low rate because your personal credit score is considered “bad”, then you can spend some time improving your credit score before you renew your surety bond at the end of the bond term to potentially get a better rate next time. 


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