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What is a surety bond?
A surety bond is somewhat like a professional co-signer. The surety company is basically promising the agency requiring the bond that you will follow the rules listed on the bond and will not cause financial harm.
The bond is NOT to protect you; the bond is in place to protect the public from you.
If you do not follow the obligations stated on the bond then a claim can be filed on your bond. The surety company will investigate and pay out if they find you at fault.
Unlike insurance, if the surety company pays out on the bond, you are obligated to pay the surety company back.
How much will my bond cost?
The cost is dependent on the type of bond. Some bonds only require an application and the cost is between 1-3%. However, some bond types do require a credit check in which case the cost will range depending on the state, bond type, and credit.
How long will it take to get approved/What is the process?
Depending on the type of bond it can take anywhere from 10 minutes to 2 business days in order to obtain a firm quote. The Surety1 process is as follows:
1. Submit an easy online application
2. Bond is quoted within 1-2 business days by email and phone call to you
3. Payment for your bond and depending on the bond type, a signed agreement
4. We mail you your bond!
What if I have challenged credit?
Not all surety bonds are based off of personal credit. It is dependent on the state and type of bond you are requesting. Surety1 has access to many secondary surety markets so we can get you the best quote possible. Secondary rates generally range from 5-24% of the bond amount.
What is a bid bond?
A bid bond is a type of surety bond that is submitted with a bid proposal to win a contract. The purpose of the bond is to guarantee that if the principal is awarded the contract, then they will enter into the agreement at the proposed price. The bid bond is normally a percentage of the bid amount, for example 5%, 10% or 20% and this amount should be listed in the bid specifications.
What is a performance bond?
A performance bond is a type of surety bond that is required once the principal is awarded the contract. The performance bond protects the obligee/owner in case the principal is unable to complete the project the surety company will guarantee the project is finished per the contract specifications. The performance bond only guarantees that the project will be physically completed per the contract requirements. The performance bond is normally 100% of the contract amount and the cost of the bond depends on the financial standing of the principal.
What is a payment bond?
A payment bond is a type of surety bond that is required once the principal is awarded the contract. The payment bond protects the obligee/owner in case the principal in unable to pay their vendors and suppliers. The payment bond guarantees that the project will be completed lien free since all suppliers and vendors will be paid by the surety company if the principal is unable to do so. The payment bond only guarantees that all bills associated with the project will be paid. The payment bond is normally 100% of the contract amount and the cost of the bond depends on the financial standing of the principal.