What is a Surety Bond?

What is a Surety Bond?

Surety Bond    

Frequently Asked Questions & General Information

What is a Surety Bond?

A Surety Bond is a generic term that encompasses many different specific types of bonds. Generally, Surety Bonds are required to obtain a specific license. A Surety Bond is a three-part agreement between The Principal, The Surety Company, and the Obligee. The Principal is the business or individual applying for the Surety Bond. The Obligee is the individual or entity requiring the Surety Bond and the Surety Company is the company who underwrites and provides the Surety Bond coverage. To apply, please complete our Surety Bond Application.

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What is a Surety Company?

A Surety Company is the carrier that will be issuing the Surety Bond. A Surety Bond company must be licensed and admitted by the Department of Insurance in the specific state(s) for which you are applying for. You can always check with the A.M. Best to verify the financial strength and rating of a Surety Company. A “T-Listed” Surety Bond Company means that the Surety Company is holding Certificates of Authority as Acceptable Sureties for the Federal Government (Department Circular 570) (T-Listed)

Who requires a Surety Bond?

Private Businesses, Municipalities, Individual States, and the Federal Government require Surety Bonds to make sure that the Principal abides by the governing laws, policies, or contracts in place.

Surety Bond Requirements

Each Surety Company has different requirements for each Surety Bond type. The Surety Bond Company will evaluate credit, financials, and experience to determine if they will extend Surety Credit. Don’t worry if you have been turned down for a Surety Bond in the past or if you do not meet the standard Surety Bond requirements. We can help! We can bond almost anyone without collateral for most License and Permit Surety Bonds. Give us a call and ask about our Bad Credit Surety Bond Program!

Surety Bond Application

Applying with our company is very easy. Complete one of our Surety Bond applications online in minutes and approvals are usually handled within 24 hours after receiving your application!

Surety Bond Amount

The Surety Bond amount varies for each Obligee so always be careful to fill out the correct Surety Bond amount on the application. Some Obligees will have a set Surety Bond amount while others will use a calculation which they will give you based upon gross volume, products sold, customers serviced, etc. If you are unsure of the bond amount you need, double check with the Obligee.

Surety Bond Effective / Expiration Date

Usually, a Surety Bond will run annually but some Surety Bonds have a specific expiration and effective date. For example, Florida requires all Motor Vehicle Dealer bonds to expire at the end of April while other states require the day that your licensed was issued as the expiration date of your bond. Always check with you State to see if they have specific effective and expiration date requirements.

Extending the term of your Surety Bond

You can extend the term of your Surety Bond if you pay an additional premium for the extended period. \ You will not have to worry about re-qualifying for the Surety Bond next year.

What happens if I get a Surety Bond claim?

If a Surety Bond claim occurs, the principal must reimburse the Surety Company for any loss the Surety Company may suffer due to the claim.

How much does a Surety Bond Cost?

Applying for a Surety Bond is FREE with our company! The Surety Bond cost varies for each bond type, credit experience, and financials. The cost of the Surety Bond can be anywhere from a half of a percent to twenty five percent of the bond amount.

Common Surety bonds 

MVD / Auto Dealer Bonds :

This MVD bond is typically required to obtain a license to sell and buy cars. The bonds are also called dealer bonds and DMV bonds.  

Payment and Performance Bonds:

Performance bonds guarantee completion of a project. Payment bonds ensure payment to any subcontractors, suppliers and/or vendors. 

Lost Title Bonds:

A Lost Title Bond, also known as a defective title bond, or Certificate of Title Surety Bond ensures that you are the rightful owner of the vehicle, Mobile home, trailer etc. The lost title bond guarantees damages up to the bond limit for a legitimate title holder that may surface in the future with a valid claim to the vehicle.

Contractor License Bonds:

A CLB Bond is required to obtain your license. Typically required by a State, but Towns, Cities and Countries can require this too.

Site Improvement Bonds:

A Site Improvement bond is also known as a subdivision bond the bond, which guarantees the completion of the site improvements, such as roads, sewers, water, electricity and other utilities.

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