October 8, 2007 by Michael Weisbrot
Shopping for a surety bond is usually new to most of our clients. Typically, people feel very lost, as the entire process is new to them and they often don’t even know what they need. Here is a quick list to bring you up to speed on five things anyone shopping for a surety bond quote should know.
1. What is a surety bond?
Our regular clientele are required to post a surety bond in order to run their business, but they have no idea what the bond is or what it actually does. To put it simply, the bond is a guarantee of your performance. The bond form (provided by whoever is requiring the bond of you) states exactly what the bond is guaranteeing, usually a statute or contract. For more detailed information see our video tutorial, “What is a surety bond?.
2. How does a surety bond work?
A bonding company backs a bond guaranteeing your company’s performance. In return, you pay a premium, which is a percentage of the bond amount. If you fail to perform per the terms of the bond, a claim may be placed against it. If the bonding company pays out on a claim, they will then turn to you for repayment.
3. Shopping with too many agencies can be risky
Some bonding companies will actually decline an applicant for all agents if they receive the applicant from too many different agents. This doesn’t mean that you can’t apply with more than one agency, but you will have to ensure that the agents do not apply to the same carriers.
4. Take verbal quotes with a grain of salt
When shopping for anything, you want to know the cost right away. Unfortunately, one size does not fit all when it comes to surety bond rates. Without applying, the best an agent should be able to do is give you a range, not a precise quote. Agents giving you an exact rate are usually giving you the lowest possible rate, which everyone does not qualify for.
5. Give yourself enough time
Many of our clients apply for their bond weeks or even months prior to when they need it. However, some wait until the day they actually need the bond to call their agent to say they want to move forward with an approval. You should know that all bonding companies are going to require you to sign an agreement prior to allowing the agent to issue the bond. In most cases, an original agreement and payment must be sent to the agency to get the bond issued. After that, it is not reasonable to expect same day turnaround on bond issuance (1-3 business days, depending on volume is our current policy).
I need a $35,000 surety bond for a used car dealership
could you give me a quote range and down payment amount.
Comment by horace pitt — March 24, 2009 @ 3:46 pm
Hi Horace,
Unfortunately, I cannot provide a quote without a completed application. No good agent will give you a quote without knowing about the bond requirement and the amount of risk you present to the surety.
Fortunately, I can provide you with some guideline ranges for auto dealer bonds! Typically, an auto dealer bond is somewhere between 1-3% annually. This would translate to $350 to $1,050 for your $35,000 bond. However, applicants with bad credit can expect much higher rates, somewhere in the range of 7.5% to 15%, or $2,625 to $5,250 in your case.
Your best bet is to apply online for a free auto dealer bond quote.
You also mentioned something about a down payment. You should know that bonding companies always require payment in full in increments of 1 year or more.
Let me know if you have any further questions!
Comment by Administrator — March 24, 2009 @ 4:23 pm
I need a surety bond for a lost cashier’s check for double of 3000. How do I get one of these?
Comment by Janie — March 25, 2009 @ 12:02 pm
Janie,
You are in need of a “lost instrument bond”. A very difficult to place bond type. Our carriers actually require us to have a personal relationship with the client. Therefore, we will not be able to help.
Since many agents may have the same prerequisite, you may want to try to procure this through a Property & Casualty agent you have worked with in the past.
Good luck!
Comment by Administrator — March 25, 2009 @ 1:13 pm
I am looking into being bonded as a self-employed Certified Caregiver. What type of bond do I obtain and how much do I obtain?
Comment by Mary — April 18, 2009 @ 6:26 pm
It depends. Are you a medicare provider? The CMS is now requiring a medicare bond.
If so, you can apply online for a free quote!
Comment by Administrator — April 20, 2009 @ 11:43 am
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Pingback by Application for title under surety bond - Surety Bond Forums — July 16, 2009 @ 11:25 am
Is personal credit score pulled? What about on spouse too? I want to go to the auto auctions in Florida to buy / sell used cars. My credit is less than perfect. Please advise if credit score is pulled and if so then what do I need to to be eligible. I.e. is 660 too low? Thank you.
Comment by Chris — September 29, 2009 @ 1:32 am
Chris,
Personal credit is taken into account. However, spouse’s credit usually is not. Typically a score of 650+ is what is need to qualify for a standard market rate or 1-3% of the bond amount. Credit scores lower than that will put you in a high risk market closer to 15% of the bond amount. You can apply online for a free quote.
Comment by Michael Weisbrot — September 29, 2009 @ 10:42 am