What is the cost of a surety bond?
A solid credit score is vital for small companies since it shows that you have been in the company for a long time and have paid all of your expenses on time. Your credit score will influence the cost of your surety bond, but it is only one of several elements that go into determining how much your surety bond will cost.
Because different sorts of businesses have varied insurance needs, the type of business you are in also has an impact on the cost of your surety bond. If you run a retail store, for example, you are obliged by law to have some amount of general commercial liability coverage, such as product liability insurance. If you’re operating a restaurant, for example, depending on the state where you do business, worker’s compensation and liquor liability insurance may be necessary.
Because different types of transactions and activities have varied insurance needs, the complexity of your transactions or operations affects the cost of a surety bond. A contractor undertaking renovation work on a government installation, for example, will need a different bond than if he or she is merely a subcontractor on the project.
Because certain states charge more to do business in, the number of states where your firm conducts business has an impact on the cost of your surety bond. If you are being bonded as a “foreign” firm, which implies your company is based outside of the state where you are asking for surety bond coverage, certain states charge you an extra price.
Because various bonds have different minimum liability limitations, the type of bond you apply for has an impact on how much your surety bond will cost. If a contractor is undertaking renovation work on a government facility, for example, the limit will be larger than if the contractor is merely subcontracting for another firm.
Is it costly to get a surety bond?
The simple answer is no, which is why many small firms opt for surety bonds. Surety bonds are often less expensive than commercial liability insurance since you won’t have to pay an insurer a premium to absorb the risk of your company failing. When it comes to underwriting, the insurer’s main concern is whether the cost of the bond is worth it for them after taking into account the likelihood that you may fail.
Many insurers may demand an extra price to guarantee that your surety bond is underwritten as a “foreign” firm because most small business owners are at a high risk of failing. This implies that your company must demonstrate to the insurer why a state premium isn’t required. It has nothing to do with where you are located or any additional expenses that may be incurred as a result of operating in particular states.
Because various organizations require different forms of coverage, there are several factors that influence the cost of your surety bond or insurance policy. Your credit score, the number of states in which you conduct business, the nature of your operation or transaction, and other factors all factor into the cost of surety bond insurance.
Is it possible to acquire a free estimate for my new company?
We will offer you an exact price that includes our premium rate when you apply for a new surety bond with us. Based on that rate, you may then determine whether or not to apply. We don’t offer free quotes because there are too many variables to consider when deciding whether your organization is eligible for coverage under any given bond.
We also don’t charge any fees prior to providing insurance, so there’s no need to provide someone with an anticipated premium cost without first gathering their personal financial information. As a result, it is essential to contact us directly by phone or email so that we can offer you an estimate for the precise amount of your premium.
When I don’t have a surety bond, what happens?
One of the last things you want to happen when you need a surety bond, such as if your company is going through bankruptcy or wants to expand, is to find out that you won’t be able to secure one. This frequently entails losing clients and closing your business until you can become bonded and restart work.
If your firm collapses and you don’t have a surety bond in place when you should have, you’ll be avoiding blame and shielding yourself from potential lawsuits at all costs. If a lawsuit is filed against them, it might hinder their prospects of receiving any money from the bankruptcy procedures, regardless of how genuine their claim is.
