This may be your first time getting a surety bond. If so, you might be wondering whether it’s refundable.
Keep reading to find the answer!
Is A Surety Bond Refundable?
Answer: Unfortunately, the answer is usually no.
But it’s not all bad news!
There are exceptions in which surety bonds might be refunded, either partially or in full.
We share some examples of this below, but first, let’s look at when a surety company can deny a refund.
When Can A Surety Company Deny A Refund?
Mainly, a surety company will deny a refund when the agreement allows them to do so.
For example, if you sign a surety bond agreement without a cancellation clause, you’ll be unable to receive a refund, even if you no longer need the bond.
Likewise, if the contract says the bonding company can claim the whole premium amount upon the bond’s issuance, you’ll be out of luck if you try to get a refund later on.
This is why it’s important to read the fine print before signing a surety agreement.
Scenarios in Which A Surety Bond Might Be Refunded
1. You purchase a bond, but it never gets submitted to the Obligee
If you buy a surety bond but decide not to use it and never give it to the Obligee (the entity requiring the bond), you might be able to get a refund since the bond was never activated.
2. You purchase the wrong type of bond
If you get the wrong type of bond, you may be entitled to a refund.
3. You pay for a 3-year surety bond, but the project is completed before the term expires
In the event of project expiration, some surety bond providers will give a prorated refund of the surety premium. But this really depends on the terms of the bond.
What Is The Cancellation Period For A Surety Bond?
Typically, surety bonds have a 30-day cancellation period. However, canceling your surety bond does not guarantee you’ll get the premium refunded.
Some surety companies provide full, partial, or prorated refunds, while others set a minimum amount that can be refunded.
Need A Surety Bond?
With thousands of different kinds of surety bonds available, knowing what kind to get can be difficult. But you don’t want to waste time finding the right one.
If you need help getting the right surety bond, contact us or visit our Surety Bonds page.
Note: The page provides an overview of many different kinds of surety bonds and highlights our specialties.