Understanding Surety Bonds Costs 

It doesn’t matter if you’re getting a surety bond for the first time or starting to get different policies as your burgeoning business increases; understanding entirely how the bond costs work is important. Surety bonds rates are known as the premium, and their amount relates to several factors. Click here to learn more about how these factors influence bond premiums and find the best solution for your needs.

How Much Does a Surety Bond Cost?

Over the typically much of costs for a surety bond, between 1% and 15% of the amount of the bond are considered averages. In other words, you would pay between $100 and $1,500 to buy a $10,000 bond policy.

Most premium amounts are based on your application and credit health, but there are some bond policies that are written freely. These bonds can be issued instantly at a fixed rate without a credit check or underwriting of any kind.

Higher-risk bonds usually carry higher premium costs. Surety companies assess the level of risk by the bond type and the applicant’s financial history. A bond type with higher risk plus an applicant’s poor credit may result in a premium up to 20 percent of the bond amount.

Factors Affecting the Price of a Bond:

The better your credit score and professionalism, the less the cost to obtain a surety bond shall be. That in mind, premiums for license, construction, and court surety bonds are practically measured on these elements;

Type of surety bond needed

Bond coverage amount required

Your credit history

Regulatory authority requiring the bond

The bond provider you work with

The state you will be operating in

Years of experience you have in the industry

Your claim history for previous bonds

Businesses and mortgage companies require credit checks in the underwriting for those bonds. Higher risk would be title and escrow agency bonds and require anything from financials, tax returns, and a credit check on the business owner.

Are Bond Amount and Bond Cost Equal to Each Other?

No, your cost for a bond is not equal to the bond amount. For example, if you need a $10,000 bond, it does not mean that you are going to pay $10,000 in order to be bonded officially.

Think of your bond coverage amount as the liability you have-the penal sum as we say in the industry. That is, you will be paying well below the coverage amount to obtain the bond; however, should a claim be made against you and upheld in court, you may be liable up to that amount.

Can you get a Surety Bond if you have bad credit?

Yes, you can get bonded through bad credit or have a claim on a previous bond. It will, however, classify you as a higher risk, which means that your premium will be higher for the policy.