Surety bonds are most commonly compared to insurance policies. But one huge difference is how often you have to pay for each one. Read on to find out more.
How often do you pay for insurance?
Insurance companies used to only allow consumers to pay for their policy in six-month or one-year terms, but more and more companies are now allowing consumers to pay month-to-month. When it comes to how often you’ll have to pay, be sure to check your policy period. AutoInsurance.org sums it up nicely by providing these common options:
You will have the following choices:
- Month-to-month terms that are usually reserved for high-risk drivers
- Six-month premiums that are preferred by most carriers
- One-year coverage options are available to consumers
Many consumers choose to pay month-to-month because this is easier for them.
How often do you pay for surety bonds?
When it comes to surety bonds, you will not need to pay month-to-month. In fact, when you get a quote for a surety bond, the quote is a one-time payment quote. This means you will only need to pay it one time (not every month).
Bonds are quoted in terms. Your term is basically how long the surety bond is in effect for (Learn more here). Most bonds are quoted at a 1-year term, but some are quoted at a 2-year or 3-year term.
For example, if you are quoted for a surety bond at $100, you will need to pay $100 for your bond. But, you do not need to pay $100 per month to maintain your bond. The quoted price covers you for the entire term of your bond.
Two things to note about cost
Now, if your surety bond is a renewable bond, meaning that you must renew it each term for it to remain valid, then you would need to pay $100 at renewal time. Usually, renewal time is one year after purchasing your bond, but depending on the bond type and bond term, your bond might not renew for 2 or 3 years. Some bonds do not renew at all.
In some cases, you can get a lower rate for your bond at renewal. Speak to your surety carrier if you have questions about your renewal rates.
If you have questions about how your initial bond rate is calculated, check out our post “How Much Does a Surety Bond Cost?”
Guardianship/Conservatorship Bond of a Minor
The other thing to note is that certain bonds require full payment upfront. Guardianship and Conservatorship Bonds of a minor, for example, require the bond to be paid in full until the minor turns 18. This means if you are quoted for a Guardian or Conservatorship Bond at $100, but the minor is only 8 years old, you will need to pay $1,000 for the bond. This is because the minor still has 10 years until he/she turns 18. The surety requires payment for those 10 years before they will issue the bond. (10 years x $100/year = $1,000).
If you have questions about how Guardianship and Conservatorship Bonds of a minor are paid, please talk to your surety company.
Can I pay for my bond monthly?
If you are looking to split your bond premium into monthly payments, the only way to do this is via a financing/payment plan. Many surety companies offer financing plans, but the bond has to meet the financing requirements to qualify.
The financing requirements are as follows:
- Bond premium must be over $1,000. Sometimes bonds must be over $1,500 to qualify.
- Bond must be a cancellable bond. This is to ensure that the surety company can cancel your bond if you fail to make your payments.
- You as an applicant also have to qualify. The surety company will need to feel comfortable putting you on a payment plan before the payment plan can begin.
Here’s a video about how financing works: