You are probably here to learn more about surety bonds but do not know where to begin. We have put together information for your reference, so continue reading for more information.
If you need to purchase a surety bond or want to know more about surety bonds in general, check out our Surety Bonds article.
Getting Started: What Is A Surety Bond?
To understand what a surety bond is good for, we first need to know what exactly a surety bond is.
A surety bond is a contract between three parties that guarantees the Principal’s capacity to complete an obligation. The three parties are the Surety, the Principal, and the Obligee.
If the Principal fails to comply with the contract, the Obligee can make a claim against the surety bond to compensate for losses.
Here is an example to help you understand this better:
Let us say that Janitor Company A is the top candidate for a janitorial cleaning job contract, but the property owner wants the company to get a surety bond as a form of insurance in the event that employees of Janitor Company A cause damage or steal something while working.
As you can see, a surety bond would be a powerful tool in this instance.
What Are Surety Bonds Good For?
If you are a small to medium enterprise and would like to bid for a specific contract against more prominent companies, a surety bond can help you secure the contract.
Surety bonds give you the credibility needed to improve your chances of winning contracts. Basically, they are a way to show that you have skin in the game.
Surety Bond Cost and Premium
So, you may be asking, how much will it cost me to get a surety bond?
The cost to get a surety bond depends on many different factors. But, generally speaking, surety bond premiums range from 1%-15% of the total bond amount.
You might be wondering, can I pay a lower surety bond premium?
Can You Pay A Lower Surety Bond Premium?
You can get a lower premium in some cases. However, this depends mainly on the evaluation done by the underwriter. What they do is look into your personal credit history, company’s financials, and other details when computing your premium.
Do You Have To Pay The Whole Amount Of The Surety Bond Premium?
In most cases, surety bond companies require a one-time full payment of the surety bond premium.
If You Can’t Pay The Whole Amount of The Surety Bond Premium, Are There Other Options?
If you cannot pay the whole amount, you will have to look for financing companies near you to help you secure the amount that needs to be paid. Some surety bond companies also offer financing options.
How Much For A $100,000 Surety Bond?
Since all construction projects amounting to more than $100,000 require a surety bond, you might be wondering how much you have to pay to get a surety bond for a project like this.
As we have mentioned above, the premium cost depends on many factors. However, typically, you will be asked to pay 1-15% of the bond cost. Again, you will need to talk to a licensed surety bond agent for the exact price.
Are All Surety Bond Companies The Same?
Surety bond companies have similar requirements to get a surety bond. However, surety companies provide special services. For example, some companies offer surety bonds for companies with lower credit scores.
If you are looking for surety bonds such as notary bonds, license and permit bonds, or janitorial services bonds, and you are in Nevada, All n One Insurance can help you. You may contact us at (702) 850-7711.