What are surety bonds?
A surety bond is a promise to pay if the person bonded fails to perform a duty, breaches a contract, or fails to fulfill an obligation. There are litterally thousands of different types of bonds. Some bonds are required for people to do certain types of businesses. Some bonds are required by courts. There are license and permit bonds that are required at local, state and federal levels.
Are Surety Bonds the same as Insurance?
No! With insurance, when you file a claim, and the insurance company pays a claim, it is usually over with. But when a surety bond holder fails/neglects to live up to the obligations required, it's a different story! The person who failed on the bond is usually on the hook, and the bond company will go after them to recover their losses.
How much do surety bonds cost?
That's an impossible question to answer because of the diversity in the different types of bonds. Some bonds are flat prices for everyone, some are not. Some bonds use credit as a factor for determining rates, others do not. And of course bonds cover different types of risks, and at different amounts (meaning, what the bond company has to pay if the bond holder fails).
Where can I find a Surety Bond?
Surety bonds can be difficult to find because insurance agents/brokers generally tend to specialize only in certain types of bonds, and do not have access to all the different types of bonds.
The Reason? ..... There are simply too many bonds for any one insurance agent to master. They stay busy enough keeping up with all the insurance changes in laws and regulations. No one person can keep up with all the surety bonds. There is simply too many of them.
The Solution: The simplest and usually the most cost effective way is to get a surety bond quote from an independent agent/broker who is contracted with large surety bond brokerage companies. This provides several key benefits:
No need to shop around! Your insurance agent will supply you with the paperwork you need to get the ball rolling. You fill it out..... return the application to the agent..... the agent will then present your application to the large surety bond brokers that have dozens of surety bond companies to quote your with.
With most bond companies, a bond application can be quoted, written, and proof of purchase can be supplied within 24-48 hours. The majority of companies can move even faster than that.
Captive insurance agents only offer surety bonds that their company sells. If that company offers you a lousy rate, a captive agent's hands are tied.
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Dan Lyles is an Independent Insurance Agent serving Ohio, Indiana, Michigan, Pennsylvania, Virginia and West Virginia..