There are numerous factors that are taken into consideration when underwriting a surety bond. For a license and permit bond the owner(s) personal credit, home equity, and net worth are deciding factors on whether to decline or approve, and at what rate.
One factor overlooked by many is the state’s bond form for the specific bond you require. This is a very important factor, as it states what the bond is guaranteeing.
The sureties are always going to be looking for a cancellation clause and an aggregate limit clause; a bond form lacking these clauses will certainly be difficult to get approved, and even harder to obtain a reasonable rate.
Some bonds are simply riskier than others due to the type of work that is being done. For instance, ICC bonds are becoming more difficult to write without collateral. Most sureties are shying away from the bond completely due to the high number of claims associated with this class of business.
Dealer bonds are more difficult to write in Florida and Texas due to high claim volume. Some sureties simply refuse to write the bonds, which makes rates less competitive for the sureties that will approve them.
So next time you call a surety bond agent, don’t ask “I need a $10,000 bond, how much does that cost?”. There are simply too many factors that determine pricing, and any agent worth a grain of salt will know not to give you a quote when he/she clearly knows that the rate can change dramatically from many different factors.