Alabama Service Contract Provider Bond Guide
In Alabama, most service contract providers must file a $25,000 surety bond to register with the Commissioner of Insurance.
Bond Overview
- Purpose: To ensure service providers fulfill contractual obligations
- Who Needs It: Companies selling repair or maintenance contracts for consumer goods in Alabama
- Regulating Body: The Alabama Department of Insurance (ALDOI)
- Required Coverage: $25,000
- Premium Rate: $250
Keep scrolling to learn more about the bonding process.
What Is an Alabama Service Contract Provider Bond?
This bond ensures that motor vehicle and consumer goods service contract providers fulfill their contractual obligations and uphold state regulations.
The Alabama Department of Insurance requires this type of commercial surety bond to register with the state.
How Much Do Service Contract Provider Bonds Cost in Alabama?
Service contract provider bonds cost a flat rate of $250 — no credit check required! Buy your bond instantly online today.
SuretyBonds.com offers the lowest available rates from our nationwide provider network with no added fees.
How Does an Alabama Service Contract Provider Bond Work?
An Alabama service contract provider bond is a legal contract between three parties:
- Principal: The service contract provider purchasing the bond
- Obligee: The Alabama Department of Insurance requiring the bond
- Surety: The provider issuing the bond
As the principal, you promise to uphold the provisions of Alabama Code Title 8 Chapter 32.
If you break the bond terms, harmed parties can file claims. The surety will validate and pay claims up to the full bond amount. However, you are ultimately responsible for refunding the surety.
Who Needs a Service Contract Provider Bond?
Typically, any company that provides a contract for the repair, replacement or maintenance of consumer goods must register with the ALDOI and provide $25,000 financial security.
However, some types of repair contracts, including warranties and maintenance agreements, are exempt under AL Code Section 8-32-1.
You can provide proof of financial security in one of three ways:
- Reimbursement Insurance: File an insurance policy for all contracts held
- Reserve Account with Security Deposit: Maintain a funded reserve account along with a minimum $25,0000 deposit with the Commissioner. This can be in the form of a surety bond, cash, letter of credit or other approved security
- Net Worth: Prove at least $1 million in net worth or equity through a current audited financial statement
A surety bond is typically the most affordable and efficient option, requiring only an upfront premium and no cash collateral.
How Do I Get a Service Contract Provider Bond in Alabama?
SuretyBonds.com provides the fastest and easiest way to get a service contract provider bond. Follow these simple steps:
- Enter Information: Fill out the quick request form on this page
- Pay Invoice: Complete your purchase online or over the phone
- Receive Bond: Receive your official bond form via email in minutes
Upon receipt, sign and file the bond documentation with the ALDOI.
How Fast Can I Get My Bond?
SuretyBonds.com offers instant Alabama service contract provider bond delivery 24/7. Purchase now to receive your official bond in minutes.
Can I Get Bonded With Bad Credit?
Yes, this bond does not require a credit check! All applicants are automatically approved at the same price, regardless of credit score.
How Do I Renew My Service Contract Provider Bond?
Alabama service contract provider bonds expire annually. When you work with SuretyBonds.com, we’ll send you reminders before your bond expires.
All you need to do is pay your renewal invoice to maintain coverage.
How to Become a Service Contract Provider in Alabama
The Alabama Department of Insurance regulates all service contract providers in the state. To apply, submit the following supporting documents via the online portal:
- Application form
- Copies of your service contracts (including declarations page and sales receipt)
- Proof of financial security
- List of all officers, directors and owners
- Articles of incorporation (if applicable)
- Payment for the $264 application fee and the $50 per contract review fee
Once approved, the ALDOI will issue your provider number. You will then be responsible for submitting all new service contracts for review.
How to Renew Your License
Service contract provider licenses expire annually. To renew, upload the following documents to your online account:
- Renewal application
- A signed statement that the service contracts submitted are state-compliant
- Proof of active financial security
- $264 renewal fee
