You’ve just been told, “you need to get a surety bond.” And then you wonder, “how do I do that?”
If this is you, then you are in the right place. Here are the six steps you need to take to get a surety bond:
Short on time? Read our How To Get A Surety Bond FAQ.
How to get a Surety Bond
Step #1: Submit an Application
This step requires basic information. Provide some personal information and a little business information. Answer some underwriting questions.
When you are working with a surety provider who has a good process, this step should only take you about 3-5 minutes.
Step #2: Underwriting & Price Evaluation
To determine how much you’ll pay for your bond, you will be evaluated.
That’s right; you will not have to pay the full bond amount.
For example, if you need a $50,000 bond, you won’t need to pay $50,000.
You will pay anywhere between 1-15% of the total bond amount.
That means for a $50,000 bond, you might only need to pay $500.
The three things you will be evaluated on to determine your surety bond rate are credit history, experience, and finances.
- Credit – Most surety bond rates are based on the credit history of the owners. Those with great credit might only need to pay 1-3% of the bond amount, while those with bad credit will need to pay more (4-15%).
- Experience – Your experience with past surety bonds and past obligations determines how much you’ll pay for your bond. You will be asked the following questions:
- Have you ever had a surety bond canceled, refused renewal or been denied?
- Have you have had a license suspended or revoked, denied or had any legal or administrative actions against you?
- Do you have any pending lawsuits, judgments, liens, or unpaid child support?
- Have you ever been convicted of fraud or a felony?
- Finances – To determine how risky it is to bond you, your past financial performance is evaluated. Here are some questions you will likely be asked on your surety bond application:
- Have you ever filed bankruptcy? How many years ago?
- Have you or any company owned by you ever failed in business?
Step #3: Quotes
After you’ve been evaluated, the surety company will provide you with your surety bond quote.
The more quotes you can get the better as this allows you to know that you are getting the best rate available for your bond.
Each carrier has their own set of underwriting rules and prices can vary widely from carrier to carrier.
If you haven’t received your surety bond quotes, check out this resource as to why.
Experience how getting a quote works by getting a free online quote:
Step #4: Sign Indemnity Agreement
Every principal (applicant) must sign an indemnity agreement which states that the principal agrees to pay back the full amount of any bond claim filed with the surety company.
More on this here, “How do Surety Bond Indemnity Agreements Work?
Step #5: Payment
You can purchase most surety bonds online.
Depending on the cost of the bond, you may be able to set up a bond payment plan to spread the premium cost over 6 months.
Learn more here: Do You Offer Surety Bond Payment Plans?
Step #6: Submit Surety Bond To Governing Authority
In most cases, you will need to mail the original bond to the governing body that requires the bond (e.g. Secretary of State, Construction Contractors Board, etc).
Surety Solutions provides you with an instant electronic copy of your bond upon purchase, but most governing authorities will only accept the original bond.
Do You Need a Surety Bond?
Getting a surety bond can be expensive, but it doesn’t have to be.
We are licensed in all 50 states and have relationships with over 30 of the top insurance carriers in the nation. This means we not only can get you bonded, but at the best price.