How Much Does a Surety Bond Cost?
"What does a surety bond cost?" is one of the most frequently asked questions consumers have when they're looking to purchase surety insurance. Unfortunately, there isn't one specific answer. Your exact surety bond cost will be determined by a few different factors.
The first factor is the type of bond you need to purchase. There are many different types of commercial surety bonds, ranging from bonds for mortgage brokers to travel agents, janitors to contractors, and many industries in between. The price of your bond will depend on the industry you work in, as bond risk varies from industry to industry.
The next factor that will help determine your bond price is your credit history. Your credit history is very important to bond companies because the surety industry is a game of risk mitigation. Credit history tells bond companies the amount of surety protection they can trust you with. Another important factor to determine your premium is the experience you have within your industry. The longer you've worked in the industry you're buying a bond for, the better rate surety companies will offer you.
Once all of these factors have been taken into account, you will fall into one of two markets: either the standard surety market or the nonstandard surety market. Those who qualify for the standard market typically have been business for more than one year, have a credit score greater than 650 and have a personal net worth that's one to three times larger than the bond amount. In the standard market, you have access to the best rates available for your bond, which are typically between 1 and 3% of the bond amount.
Don't worry if you don't meet these requirements and fall into the nonstandard market; you can still purchase a surety bond. The only requirements for the nonstandard market are that you're a registered U.S. citizen who has no prior surety claims. The premiums in this market are simply a little higher, ranging from 6-15% of the bond amount.
We hope this information has been helpful in assessing a general idea of what your bond will cost. If you have any further questions, please feel free to visit our Surety Bond Answers forum to ask anything else. Our staff will get back to you in a timely manner. Or, feel free to call one of our bonding specialists at 1 (800) 308-4358 to get an answer immediately or to get a free surety bond quote.