Surety Bond Renewal Guide
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Surety bond renewal is a common process that is generally quick and easy. However, knowing if and when you need to renew or extend a bond can be a different story.
Understanding what you need to do to renew a bond includes understanding your bond term—there are four types—and our guide below walks you through them all. We also cover how to renew a surety bond, the requirements for surety bond renewal, surety bond renewal costs, and many more FAQs.
Before we dive in, here's a quick refresher on the three parties involved in a surety bond as they will pop up frequently in this guide.
- PRINCIPAL: the bond holder. A party/business required to obtain the bond and fulfill the obligations outlined in the bond contract
- OBLIGEE: the one requiring the bond. An entity requiring the principal to purchase the bond (government agency, regulatory body, etc.)
- SURETY: the bond provider. A bonding company that guarantees to back potential claims financially.
What is a Surety Bond Renewal?
Surety bond renewal is a process that renews or extends an existing bond for another term. The length of a term (how long a surety bond is valid) varies depending on the type of bond and the regulations tied to it.
All bonds have one of four bond terms.
- Term Bond
A bond with fixed dates. There is a clear effective date and expiry date, and a new bond is required for any period that follows. Example, Effective from December 31, 2023 to December 31, 2024.
- Continuous by Certificate
A bond that requires a continuation certificate to be renewed or extended. This certificate generally extends a bond by a year.
- Continuous Until Canceled
A bond that is continuous until canceled stays valid indefinitely. It only becomes invalid when an obligee releases the bond or it is canceled by the surety.
A bond with no termination or expiration date. While they can still be canceled, they differ from the continuous until canceled bond—they can only be canceled by the obligee. This bond's cancellation is due to the principal completing their duties outlined in the bond contract. For example, a fiduciary bond in the State of California can only be canceled by the court requiring it (the obligee). This is the case for most court bonds.
How Do I Know Which Bond Term I Have? Check the optional clause section on your bond form. This information is also commonly available in the statutes, regulations, private contracts, and ordinances that dictate the need for your bond.
What is the Surety Bond Renewal Process?
- Receive Your Expiry Notice
Sureties send out notices anywhere from 30 - 90 days before a bond's renew-by-date. However, on the off chance that a surety fails to send you notice, they are not liable for any repercussions due to your bond expiring—it is your responsibility to renew your bond on time. Therefore, you should always note when your bond expires and start the renewal process well ahead of that date.
- Contact Your Surety & Fill Out Forms
Expiry notices generally come with a free quote for your renewal premium, an invoice link, and any forms you need to fill out. If you didn't receive these with your notice, contact your surety to let them know you would like to renew your bond.
- Most renewals don't require any supporting documents. However, if there are changes to your bond, you will have to go through the underwriting process again—same as when you first applied for the original bond. The underwriters may request information regarding a business or individual's history, financial statements, job background, and credit history.
- Submit Renewal Forms and Payment
Send the completed forms back to your surety and pay the bond renewal premium. You must also sign and send a new indemnity agreement if your bond underwent any changes.
- Receive Your Surety Bond
You can expect a copy of the bond in your inbox within a day or so after submitting payment. Additionally, a hard copy and any needed certificates will be sent to you in the mail. Always double-check that all the information tied to the bond is correct. If there is an error, contact your surety immediately.
- Submit Proof of Renewal to Obligee
You will receive a new bond that you must file with the obligee.
Continuous by Certificate
You will receive a continuation certificate that you must submit to the obligee.
Continuous Until Canceled
You may receive a verification certificate to submit to the obligee. However, this isn't required most of the time. It is generally only needed when your certificate hasn't been updated in a few years with the obligee, or you swapped to another surety company.
No documentation is sent, and nothing needs to be filed with the obligee.
What are the Requirements for Bond Renewal?
You can renew your bond online or by phone with most sureties. If you are changing any information on your bond (the bond amount, bond language, underlying agreement, bond requirements, etc.), then you may also need to gather supporting documentation for the underwriting process. This may include financial statements.
When to Renew My Surety Bond?
Renew your surety bond before it expires.
You can renew your surety bond 90 days before your bond expires. And it is highly recommended not to wait until the last minute. Your bond will not renew until everything has been processed through your surety, including your filled-out forms and payment. While this often only takes a day or so, always plan for delay to avoid issues.
What Is the Cost to Renew a Surety Bond?
The cost to renew a surety bond is often similar to the initial bond cost—provided there aren't any major changes to your credit score, housing situation, or the bond amount you need. You also shouldn't have claims on your previous bond to qualify for your current rate.
How Can I Get a Better Rate When Renewing a Bond?
Improving your credit score and financials is one way to secure a lower rate. However, if your surety bond renewal is right around the corner and both those factors haven't improved, you may want to consider swapping to a larger, a-rated surety company.
Larger surety companies, like JW Surety, can often provide you with a better rate than smaller surety companies, new sureties, or insurance companies. Our lower surety bond costs/more competitive rates are possible due to the large volume of bonds we underwrite. Just note that if you are switching to a different bonding company that your current surety will have to issue a notice of cancellation.
Can I Renew a Bond with Bad Credit?
In many cases, yes. Renewing a bond with bad credit is possible for many bond types—but you should expect to pay a higher rate.
What if I Don't Renew My Surety Bond?
If you don't renew your bond, it will expire and your surety may issue a notice of cancellation.
Furthermore, if you still need your bond and it expires, you are poised to face repercussions which may include:
- Suspension or loss of license in the case of certain licensing bonds such as auto dealer bonds and contractor license bonds.
- Fines and charges due to conducting business without possessing the required bond. A bond is a licensing requirement for many professions; it is illegal to operate without one.
- Lapse in coverage. If someone makes a claim against your bond while it isn't active the surety is not required to pay for the costs. This means that you will have to pay all claim costs upfront, out of pocket.
Is an Expired Bond a Canceled Bond? Not quite. While your surety may cancel your bond if you don't renew it by the expiry date, you still need to contact both the surety and your obligee to completely cancel a bond.
- Contact your surety to let them know you want to cancel your bond.
- Both you and the surety need to submit a notice of cancellation to the obligee. Once the obligee receives this notice, unexpired bonds will remain in effect for a select number of days (usually between 30 and 90).
Have more surety bond renewal questions? Contact our bond experts.