What is a Driving School Bond?
A driving school bond is a surety bond that is required in some states for private schools that offer driving instruction for a fee. The bond ensures that the driving school complies with state and local regulations when working with clients. If the driving school fails to abide by the law, a claim can be made against the bond to cover financial losses incurred by the client.
Like other surety bonds, a driving school bond is a contract between three parties. The driving school is the principal required to post a bond, while the obligee is the state or local authority that requires a bond to be in place. A surety company provides the bond to the principal and pays for claims against the bond. However, the driving school is responsible for repaying claims paid by the surety company.
What Does a Driving School Bond Cost?
The guidelines for posting a driving school bond vary depending on state-specific regulations, and the total bond amount can range from $1,000 up to $50,000. Fortunately, driving schools do not pay the full bond requirement. Instead, bonds are priced as a percentage of the bond amount, typically costing between 1 and 10% of the bond.
The percentage of the total bond requirement you pay for a driving school bond depends on several different factors, including details of the business and your personal credit score. Because a driving school bond functions as an extension of credit to your business, having a clean credit history and high credit score are beneficial in keeping the cost low. You can still get a driving school bond with less than perfect credit, but you pay a higher percentage than someone who has a healthy credit score.
How Do I Get a Driving School Bond?
You can submit a short online application for a driving school bond and receive a quote once your business and personal credit details are reviewed by the surety company.