Answers
Questions and answers
Short, plain-language answers to the questions that come up most. Each one links to the services and state details behind it.
Bond basics
How much coverage does a surety bond provide?
The bond amount is the maximum the surety will pay on valid claims over the life of the bond, and it is set by the obligee, not by you. It is not a pool that re
What is a surety bond?
A surety bond is a three-party agreement where a surety company guarantees that you, the principal, will meet an obligation to a third party, the obligee, often
What is the difference between a surety bond and a cash deposit?
Many license requirements let you either post a surety bond or deposit the full amount in cash with the regulator. A bond costs only a premium, a fraction of th
What is the difference between a surety bond and insurance?
Insurance protects the party that buys it against its own losses. A surety bond protects someone else, the obligee or the public, against your failure to meet a
Who needs a surety bond?
Surety bonds are required of many licensed businesses and contractors. Common examples include collection agencies, mortgage and lending companies, money transm
Bond pricing
Can I get a surety bond with bad credit?
Often yes. Many bonds are still available to applicants with weaker credit, usually at a higher premium rate, and some markets specialize in higher-risk applica
Do I get my surety bond premium back?
Generally no. The premium is the cost of the surety guaranteeing your obligation for the term, so it is earned once the bond is issued, much like paying for cov
How much does a collection agency bond cost?
You pay an annual premium that is a small percentage of the state's required bond amount, not the full amount. States set collection agency bond amounts commonl
How much does a surety bond cost?
You pay a premium that is a fraction of the bond amount, not the full amount. The premium depends on the bond type, the required amount, and underwriting factor
Bond terms
Can I cancel a surety bond?
Often yes, but how depends on the bond. Many bonds can be cancelled with written notice to the obligee and surety, sometimes after a required notice period, and
How long is a surety bond valid and do I renew it?
Most surety bonds are written for a set term, commonly one year, and you renew them by paying the premium for the next term as long as the underlying obligation
Bond types
Do I need a mortgage broker bond?
Most states require a surety bond as part of mortgage broker, lender, and originator licensing, with the amount set by the state and often tied to your loan vol
What is a bid bond and a performance bond?
A bid bond guarantees that if you win a project bid, you will enter the contract at your bid price and provide the required bonds. A performance bond then guara
What is the difference between a license bond and a contract bond?
A license bond, also called a license and permit bond, is required by a government agency before it issues a license and guarantees you will follow the laws gov
Contract bonds
How much does a bid bond cost?
Usually nothing separate. A bid bond is typically issued at no standalone charge because it is part of the surety relationship that will back the final performa
How much does a subdivision bond cost?
Premium typically runs about 1 to 3 percent of the bond amount per year for a well-qualified developer. The bond amount itself is not a fixed statutory figure:
What is the difference between a performance bond, a payment bond, and a bid bond?
A bid bond backs your bid: if you win and refuse to sign, the owner recovers the difference to the next bidder. A performance bond guarantees you finish the wor
Getting bonded
How do I get a collection agency bond?
Confirm the bond amount and form required by the state licensing your agency, apply with a surety through an agency like Cornerstone, and go through underwritin
How do I get a surety bond?
You apply through a surety provider with information about your business, the bond type, and the amount the obligee requires, and the surety underwrites the req
How long does it take to get a surety bond?
Many small, fixed-amount license bonds can be issued the same day or within a day or two, because they need little underwriting. Larger bonds, contract bonds, o
What information do I need to apply for a surety bond?
At minimum you need the bond type, the required amount, and the obligee that requires it, plus basic business and owner details. For larger bonds the surety may
What is an indemnity agreement on a surety bond?
An indemnity agreement is the contract you sign with the surety promising to repay it for any valid claim it pays on your bond, plus related costs. It is what m