Service Contract Provider Bonds

What Are Service Contract Provider Bonds? 

Service contracts are add-on purchases for additional maintenance on a home, motor vehicle or consumer product during or after its warranty period expires. Service contract provider bonds ensure that providers meet state compliance requirements for extended service contracts and have the financial capacity to fulfill them in the future. 

How Do Service Contract Provider Bonds Work? 

Service contract provider bonds ensure that providers are compliant with state regulations and fulfill their consumer contracts as promised. These commercial surety bonds bind three parties in a legal contract: 

1. Principal: The service contract provider purchasing the bond 
2. Obligee: The state insurance department requiring the bond
3. Surety: The company issuing the bond

If a service contract holder is harmed by a provider, they can file a claim on the bond for reimbursement. The surety will validate and pay consumer claims up to the full bond amount. Then, the principal is responsible for repaying the surety in full. 

Who Needs a Service Contract Provider Bond? 

Each state has different regulations surrounding service contracts. Typically, to become a licensed service contract provider, you’ll need to provide some form of financial security: a surety bond, letter of credit, cash, or other collateral. A surety bond ensures the state insurance office that you have the assets and resources to fulfill service contracts as promised. 

Select your state below for more information about service contract provider bonds in your area. 

How Much Do Service Contract Provider Bonds Cost?

With a bond, you only have to pay a small percentage of the penal sum and the surety backs the rest of the obligation. Service contract provider bond premiums are typically 1–10% of the bond coverage amount, based on the applicant’s credit score. Apply now to get a free quote within one business day. 

How to Get a Service Contract Provider Bond

With SuretyBonds.com, getting bonded is quick and easy. Just follow these four steps to get your service contract provider bond online: 

1. Select the bond type and amount you need.
2. Submit an online application form. 
3. Receive a free quote within one business day. 
4. Purchase your bond online or over the phone. 

We’ll mail or email your official bond documentation. Be sure to file it with the obligee to become officially licensed and bonded. 

Can I Get a Service Contract Provider Bond With Bad Credit?

Yes, we work hard to approve 99% of applicants for the bond they need. Although poor credit may result in a higher premium, we’ll search the top surety markets nationwide to find the best available quote for your situation. Visit our Bad Credit Bonding Program page to learn more.