Surety bonds an alternative to car insurance in some states

While most people carry car insurance to cover their vehicle liability, in many states there is another option — taking out a surety bond. If drivers do not want to pay the cost of car insurance, they can opt to self-insure, demonstrating independent of car insurance that they have the financial means to pay for any damage to other people or cars if they get in an accident. The primary way to self-insure is by taking out a bond.

In California, for instance, any vehicle owner can demonstrate their financial responsibility by offering up a $35,000 cash deposit to the DMV, or obtaining a $35,000 surety bond. Since obtaining the bond does not require locking up 35 grand in cash — most sureties only require deposit of a small percentage of the bond’s face value — it’s by far the more popular option.

In some states, only owners of many vehicles can take the self-insurance route and post a surety bond. In that case, it can be a good option for companies that have a fleet of vehicles. For instance, in Washington State, you must own 26 vehicles to qualify to self-insure. The bond must be for at least $60,000, filed with a bonding company authorized to do business in the state.

At SuretyBonds.com, we’re licensed to sell bonds in all 50 states. If you have questions about whether self-insuring could be an option for you, feel free to contact one of our experts.

Photo via Flickr user L. Marie