What is a Yacht Broker Bond?
In many states, yacht brokers are required to post a yacht broker bond in order to become licensed to operate a business. As a license bond, a yacht broker bond is a safeguard for the public and the state that helps ensure a licensed broker abides by applicable laws. If a yacht broker fails to comply with regulations relevant to the industry, a claim can be made against a yacht broker bond to cover financial damages a customer suffers.
Like other surety bonds, a yacht broker bond contracts three specific parties. The principal is the licensed broker responsible for obtaining a bond. The obligee is the state licensing authority requiring a bond to be posted. The surety company provides the bond to the principal and extends a form of credit to cover legitimate claims. Yacht broker bond claims, however, must be repaid by the principal.
What Does a Yacht Broker Bond Cost?
Yacht broker bonds are required in various amounts depending on the state regulations where the business operates. The bond amount dictates the price of the bond, and it generally falls between $5,000 and $200,000, based on the sales volume and licensing requirements. However, yacht brokers do not pay the full amount of the bond. Instead, a bond premium is calculated as a percentage of the bond total, ranging between 1 and 10% of the required bond.
The bond premium you pay as a yacht broker is based on your personal credit score and business financials. Yacht brokers with a clean credit history and a high credit score are perceived as a lower risk than those who have a bad credit history. In many cases, you can still obtain a yacht broker bond with bad credit, but the bond premium will be a higher percentage of the bond total.
How Do I Get a Yacht Broker Bond?
You can start the process of getting a yacht broker bond by submitting a short online application. Once the details of your business and your personal credit history are reviewed, you receive a quote for your bond premium.
