If you have never needed a bond until now you’re probably have no idea what a surety bond is?

A surety bond is usually required by a state in order to obtain a license. There are thousands of different types of bonds, covering car dealerships to contractors, there’s practically a bond for every type of business.

History

Surety bonds can be dated back to the Mesopotamian days; it’s the oldest form of insurance. There is evidence of Individual Surety Bonds in the Code of Hammurabi and in Babylon, Persia, Assyria, Rome, and Carthage.

What does a bond do?

Surety bonds do not protect you, but the obligee.  So why do you need a bond if it does nothing for you? The answer is because you have to have one in order to obtain your license. Sometimes the obligee will waive the bonding requirement if you post a cash bond or an ILOC. The problem with doing that is that the state “obligee” may hold on to your collateral until all liability has been released. You are probably asking yourself now how long does that take. The answer is they can hold your collateral until the statue of limitations runs out and there are no statues of limitations on fraud.

How is a surety bond rate determined?

The rate is equated by many factors state, bond type, credit, personal net worth, business net worth and experience.

If you are not ready to apply for a bond  and you just want to see what the surety bond could cost, check out our surety bond quick quote.

How can an insurance agency expand their business in this economic climate?

The answer is diversification. If you’re a insurance agency that only writes personal lines you need to change it up and start writing commercial insurance. A good way to get into writing commercial insurance would be writing surety bonds. If you have never heard of  surety bonds, a surety bond provides consumer protection as a condition to granting licenses related to ” Motor vehicles “Mortgage Brokers Contracting services and other professional regulated licenses. Each State has its own surety bond amount as well as Bond form. I know it doesn’t really sound like a form of insurance, but it is. You can only sell surety bonds if you have an insurance license.  Surety bonds protect the consumer and help weed out flyby night companies. If your office writes surety bond you get your foot in the door to write the liability insurance or business owners policy that is required to have by the state.