How is the cost of a surety bond calculated?
The cost of a surety bond is dependent upon a variety of factors, but in almost all instances it is a small percentage of the total bond amount—typically 1-10%. All surety bonds are either issued instantly at a set premium for every applicant or subject to review by an underwriter where the cost will be calculated based on things like the bond amount, the risk associated with the bond, and the risk associated with the applicant.
Unlike insurance policies that are written to take into account the losses suffered when a claim is made, underwritten surety bonds are issued to applicants who are considered to be of minimal risk. That is to say, surety companies issue bonds assuming the principal—the entity buying the bond—will not have any claims against their bond.
What does an underwriter look at when determining rates?
When determining rates, underwriters examine each individual who has a 10%+ ownership stake in the entity being bonded. Factors specific to each individual that may be taken into account are work history, a credit review, and other financial records including personal and business financials. Underwriters also consider the amount of the bond and the risk associated with that bond type when considering the cost of the bond. By reviewing all of this information before providing a quote, the underwriter is able to adequately assess the risk involved with writing the bond.
Why does the bond’s risk affect my rate?
A surety bond is a financial guarantee of the principal’s ability to meet the bond’s terms. When a surety provider issues a bond, the underwriter provides this guarantee. The lower the risk, the lower the rate. Professions, such as telemarketers or mortgage brokers, receive a higher number of claims. This means the risk is higher. When applying for risky bonds you should expect an extensive financial examination. These usually need a financial report audit and complete credit history review.
Can I qualify for a surety bond with bad credit?
Whether you qualify for a bond with bad credit largely depends on the type of bond you need and whether or not underwriting is required. A low credit score generally does not disqualify an applicant from getting an underwritten bond, especially if there is a good explanation for why the credit is poor. However, underwriters view bad credit applicants as being higher risk and may charge a higher premium for the bond.
Generally speaking, the higher your credit score is, the lower your surety bond rate will be. Don’t worry if you have less-than-stellar credit. SuretyBonds.com works with underwriters that specialize in bad credit bonds. This means we can issue bonds to 99% of applicants regardless of their personal credit score. SuretyBonds.com can offer premium financing rates to applicants who work in non-standard markets.
Does the state I’m getting bonded in affect my rate?
Each bonding market has different regulations to meet. The bond’s jurisdiction could also affect your surety rate.
For more specific pricing information at the local level, select your state below.
Or, choose your state from the list below:
- New Hampshire
- New Jersey
- New Mexico
- New York
- North Carolina
- North Dakota
- Rhode Island
- South Carolina
- South Dakota
- Washington D.C.
- West Virginia
Three ways to apply for your surety bond
Innovating and simplifying is one of the main SuretyBonds.com values. We have the easiest bonding process in the industry, meaning you get bonded quicker when you choose to work with us. Depending on whether underwriting is required, you can get your free, no obligation surety bond quote in one of three ways.
Instant Purchases: These bonds don’t need underwriting, meaning everyone qualifies to pay the same price. When you find the bond you need, select the option to “Buy Now” and purchase your bond online in just a few minutes. Examples of these bonds include: notary bonds, insurance adjusters, and cleaning company bonds.
Express Applications: Express application bonds need underwriting. You can save time by inputting essential information through our secure platform. A Surety Bond Specialist will then call you with your lowest rate possible within 1 business day. Examples include: freight broker bonds, auto dealer bonds, contractor bonds, and credit service organization bonds.
Online Quote Requests: Online quote requests are for bonds that are not currently available for instant purchase or express application. When you submit an online quote request, you will be asked to provide your name, phone number, email, the state where you are getting bonded, and the type of bond you need. After your information has been received, our team will follow-up with a phone call to finish your application and answer any questions. When your application is complete, we will shop your bond with several nationwide markets to find your lowest available quote.
If you’d prefer not to submit your information online, please feel free to call us toll-free at 1 (800) 308-4358 and one of our team members will be happy to assist you.