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We have set out the most frequently asked questions below. You will also find further questions answered on another page of this site on a secondary page.

Surety bonds – what are they?
How do I go about obtaining a bond?
How does a surety bond work?
Is a bond worth having if I were to pay for a claim?
What is the cost of surety bonds?
Do I really need a surety bond?
Who is an obligee?
Can you tell me what a blank bond form is? Where can I find one?
What is the estimated turnaround time for bonds?
Why does the indemnity agreement need to be signed by my spouse?
Does your business get involved with brokers?

Surety bonds – what are they?

When you buy a surety bond, you are buying a guarantee against something. Different bonds guarantee different things. It all depends on what the bond was created for. A surety bond is not a type of insurance; rather it is a credit system.

How do I go about obtaining a bond?

The first step is to make an application. Depending on your application status the agent will be able to give you an approval either on the day you apply or anything up to four business days afterwards. At the time of approval you will be told the cost of your premium. You will also be given an agreement between you and the company issuing the bond. Once you have paid for the bond and sent back the agreement (usually the original agreement), your bond will be issued. This takes one to two business days further.

How does a surety bond work?

The amount of the bond is used to produce a bond premium. This is the amount you will pay as the principal holder of the bond. The surety is the person or company extending the bond to you. They guarantee to provide the bond; this is called surety credit. If you fail to adhere to the terms set out in the bond agreement, the surety can look into the matter to see if a claim on the surety would be allowed. If it is, you will be required to pay the claim along with any legal fees associated in the matter.

Is a bond worth having if I were to pay for a claim?

It is vital to understand that a surety bond is not a form of insurance. Instead it gives you a line of credit. You are still responsible for paying claims that may arise with regard to the surety bond. Surety bonds do have advantages, namely that they mean you don’t have to have any collateral. They also amount to less, typically speaking, than the amount earned by you investing your capital even in a conservative manner. If you do not have a bond you would have to resort to cash or obtain a letter of credit. If you decide to get a letter of credit, the fee for such would be akin to that paid on a bond premium.

What is the cost of surety bonds?

The premium you will pay for your bond will vary depending on a number of factors. For example two different people will pay different amounts depending on their status, the type of surety bond they get, the obligee and various other factors. The premiums will adhere to standard rates for the market however, which can range from 1% to around 3%. If there is more risk inherent with your bond, this could rise to between 5% and 20%. The percentage is calculated as part of the total bond amount.

Do I really need a surety bond?

Yes – certain private or government authorities will require it. The bond means you will adhere to the guidelines they lay down, and you will need it to be able to operate.

Who is an obligee?

The person asking you for the bond is the obligee. This could be any kind of person depending on the situation you are in, but the term always applies to the other party.

Can you tell me what a blank bond form is? Where can I find one?

The blank bond form sets out the guarantee and its terms. You have to post the blank copy so that the bond agency can fill it out. The obligee will get the blank form for you. The agency then signs for the surety and the power of attorney is also attached to complete the process.

What is the estimated turnaround time for bonds?

Turnaround is fairly quick, with some approvals being granted immediately and others requiring from one to four days. Once the payment for the bond has been made and all other requirements are met, the bond is issued in one or two days. Timescales depend on the actual bond being considered and/or granted.

Why does the indemnity agreement need to be signed by my spouse?

A bond is put in place to guarantee something. It is underwritten by the bonding company. They ask your spouse to sign to provide a further guarantee that you will pay it, since you will have joint assets that could be seized if a claim is made. This is a requirement in every bond circumstance.

Does your business get involved with brokers?

Yes – our commission schedule is usually around 10% for brokers, but will vary depending on the kind of bond requested and also the number of bonds you apply for. We require you to register securely online before you can send any online applications.
 

     
  Fantastic experience. I will use you again next year! Thanks for the quick turn-around, couldn't be happier.

~James H, MI