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Step-by-Step Guide to Getting Your Tennessee Surety Bond
Getting a Tennessee surety bond is often a mandatory step for licensing, contracting, and various legal processes. A surety bond is
essentially a three-party contract that guarantees a principal (the person or business needing the bond) will comply with laws, regulations, or contractual obligations.
Here is a comprehensive guide to understanding and obtaining a surety bond in Tennessee.
The Three Parties of a Surety Bond
A Tennessee surety bond involves three distinct entities:
- The Principal: This is the individual or business that purchases the bond and is obligated to perform a specific act or comply with regulations (e.g., an auto dealer or contractor). They are financially responsible for claims.
- The Obligee: This is the entity that requires the bond (usually a state or local government agency, like the Tennessee Department of Revenue or a licensing board). The obligee is protected by the bond.
- The Surety: This is the insurance company that issues and backs the bond. They guarantee to pay the obligee up to the bond’s full amount if the principal fails to meet their obligations and a valid claim is filed. The principal must then reimburse the surety for any paid claims. Surety1.com represents over a dozen, “A” rated surety companies.
See our “What is a Surety Bond” Video.
Common Types of Tennessee Surety Bonds
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License and Permit Bonds (Commercial Bonds)
These are required by state or municipal government agencies to obtain and maintain a professional license or permit, ensuring compliance with state law. Some common L&P bonds include:
- Collection Service Bond – Required for collection agencies in the state. Minimum bond amount is $15,000.
- Contractor License Bond: Required for certain contractors, especially those involved in home improvement projects over a specific dollar amount (e.g., $25,000). A common bond amount for Home Improvement Contractors is $10,000.
- Lost Stock Certificate Bond: Required by the transfer agent when a stock certificate is lost or cannot be located.
- Money Transmitter Bond :Minimum bond amount is $50,000
- Mortgage License Bond: Required by the Department of Financial Institutions. It is required to obtain a license in the mortgage industry in the state.
- Motor Vehicle Dealer Bond: Required for licensed motor vehicle dealers. The bond amount is $50,000 and is generally valid for a two-year license term.
- Title Bonds (or Lost Title Bonds): Required by the Tennessee Department of Revenue when a vehicle’s title is lost or defective, in order to register the vehicle and obtain a new title. The value is typically 1.5 times the vehicle’s fair market value.
- Business Service Bond : If your license or profession has no surety bond requirement attached to it but one still wants to “be bonded”, Surety1.com offers this bond at a very affordable price.
This is just a small sample. Above is a comprehensive list of Tennessee surety bonds.
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Contract Bonds (Construction Bonds)
These bonds are used in the construction industry, particularly for public works projects, to guarantee that a contract will be fulfilled according to the terms and specifications.
- Bid Bonds: Guarantees that a contractor who submits a bid will enter into the contract if awarded the job.
- Performance Bonds: Guarantees that the contractor will complete the project as specified in the contract.
- Payment Bonds: Guarantees that the contractor will pay subcontractors, laborers, and material suppliers.
Surety1.com has some of the best contract bond agents in the nation, with decades of experience in finding the right fit for all your construction bonding needs.
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Court and Fiduciary Bonds
These bonds are required by a court to protect the interests of a party awaiting the outcome of a legal proceeding or to ensure a fiduciary properly manages the assets of another.
- Probate Bonds & Other Fiduciary bonds: Required for executors, administrators, and guardians to ensure they faithfully manage an estate’s assets.
- Appeal Bonds & other Civil Court Bonds: Required when appealing a court decision to guarantee payment of damages and court costs if the appeal fails.
Cost and Requirements for a Tennessee Surety Bond
The price you pay for a surety bond is called the premium, and it is only a small percentage of the total bond amount.
Key Factors Affecting the Cost
The premium rate usually ranges from 1% to 3% of the full bond amount. For most license and permit bonds, the rate is primarily determined by:
- Bond Amount: The required dollar amount of the bond set by the obligee.
- Personal Credit Score (for some bonds): A high credit score (typically 650+) indicates a lower risk to the surety, resulting in a lower premium.
- Professional Experience & Financials: For larger or more complex bonds (like contract bonds), the surety will also look at your business’s financial statements and industry experience.
Obtaining a Bond with Bad Credit
If the surety bond you need is credit based and you have challenged credit, you can still get bonded. Typically you pay a higher premium (sometimes 4%–10% of the bond amount). Surety1 has access to several “bad credit” or “high-risk” programs.
How to Get a Surety Bond in Tennessee
After determining the type of bond you need, the best way to start is by completing an application. For most license and permit Surety bonds, Surety1 has a simple, three step process:
- Complete the easy to navigate and secure online application.
- Review the free, no obligation quote from one of Surety1’s professional surety bond agents, usually within one business day.
- Sign some paperwork and pay the bond premium
Once these steps have been completed, the surety bond will be shipped to the bond applicant.
For larger or more complex surety bonds, an agent from surety1 will contact you if additional information is necessary to get you a competitive bond quote.
See our “How does the Surety Bond Process Work” Video
Key Advantages of Choosing Surety1.com for your Tennessee Surety Bond
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Specialized Expertise (Surety-Bond-Only Agency)
- Deep Focus: Unlike general insurance brokers who sell various policies (auto, home, life, and bonds), Surety1.com is a dedicated surety-bond-only agency.1 This means their staff are specialists who focus exclusively on the underwriting, regulations, and specific requirements for various bonds, including those mandated by Tennessee state and local obligees.
- Regulatory Knowledge: They have experience with common Tennessee bonds, such as the $50,000 Auto Dealer Bond, Contractor Bonds, Notary Bonds, and Title Bonds, which ensures they can quickly guide you through the correct requirements.
- Broad Access to Competitive Rates Multiple Carriers: Surety1.com is licensed nationwide and represents a large network of reputable, A-rated surety companies (often 15 or more).
- Rate Shopping: By submitting your application, they can shop your bond request across multiple underwriters. This competition helps them find the most competitive premium and best program tailored to your specific credit profile and financial situation, ensuring you get the most affordable rate available.
- Speed and Efficiency Fast Approvals: They promote a quick and streamlined process. For most common license and permit bonds, you can often apply online and receive your quote within one business day.
- Simplified Process: Their stated process is typically:
- Apply Online
- Get Your Free Quote
- Get Your Bond.
- Strong Reputation and History : A+ BBB Rating: Surety1.com maintains a high rating (often A+) with the Better Business Bureau (BBB), indicating a commitment to customer service and resolving
- Established Experience: The company has been providing surety bonds nationwide since 2003, giving them a long-standing track record in the industry.
- Positive Customer Feedback: Customer reviews frequently praise their staff’s professionalism, clear communication, and fast turnaround times.
In short, you would choose Surety1 for our specialized knowledge, our ability to secure the best price by shopping your application, and our focus on providing a fast and efficient application process.
See our Benefits of Working With a Surety Bond Only Agency blog.
Surety1.com is a service of AssuredPartners one of the largest and fastest growing insurance agencies in the nation. Representing over a dozen surety bond companies, Surety1.com is the premier online provider of surety bonds nationwide since 2003.
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Surety1 was founded in 2003 and helps thousands of clients find the best prices on their surety bonds. We take pride in our work so that we can give you great service. Learn more about Surety1.