What does a surety bond cost?
Surety Bond Cost Factors
Bond Costs Made Easy
Surety bond costs can vary drastically. The two main factors that will affect your bond pricing are the bond amount required of you and your rate.
Bond Rates Explained
Your surety bond rate is the percentage of the full bond amount you'll have to pay. Rates will vary depending on your likelihood of causing claims on your bond, which you're responsible to pay. In other words, your rate will depend on the amount of risk you pose to the surety company writing your bond. Find out how surety companies determine your risk and bond rate.
Discover What Your Bond Will Cost
Your bond pricing will be a small percentage of the full bond amount required of you (except for contract bonds, which are based on the full contract amount). Whether you need a surety bond to get a business license, or a construction bond to perform work on a public job, you can get a free ballpark estimate or firm online quote by using our bond cost calculator. If you're unsure of which bond you need or whether you need one at all, we recommend you contact a bond professional to ensure you're abiding by the law and meeting all requirements.
What Do Contract Bonds Cost?
Three Things You Should Consider Besides Cost
Most bond agencies don't take the time to explain that pricing is only one of several important things to consider when purchasing your surety bond.
#1: Claims Put Your Personal Assets at Risk
As mentioned above you're responsible to pay for bond claims, and your personal and corporate assets will be used to pay them. Most bond agents won't explain how claims can put you at risk and how to avoid them; if this happens when working with a bond agency it should be a big red flag to reconsider doing business with them. However, your bond can benefit you as well. If bond claims occur, it's priceless to have a knowledgeable bond agent on your side to deal with the massive bonding companies that may view you as a number rather than an individual or small business owner. Bond claims are common and whether they're legitimate or not, a good bond agent will find a resolution in your best interest when they happen. Since you pledge your assets when you purchase a bond, it's important to partner with a bond agent that will act as your first line of defense against bond claims.
#2: Partner With a Strong Surety Company
Make sure you get your surety bond from a surety company that's financially strong and meets all of the requirements of the obligee. If you get your bond from a surety company that neglects to meet common requirements, e.g. having the necessary financial strength rating by a financial rating company such as A.M. Best, or being licensed to write bonds in your state, your bond will be rejected forcing you to purchase a new one with no refund. When working with a bond agency, always ask if the surety company writing your bond meets the requirements of the obligee (hint: only good bond agencies work with financially sound surety companies that meet all necessary requirements). Watch our video to learn how you can find the right bond company for you.
#3: Turnaround Time on Your Surety Bond
Depending on who you work with, getting your surety bond can be a long and painstaking process requiring you to submit dozens of pages of your financial and company information. However, there are companies that streamline the process by providing online bond approvals, and are able to send your surety bond to you as quickly as you complete the bond application.
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