Posts Tagged ‘surety bond cost’

Surety Bond FAQ

Monday, May 17th, 2010

What is a surety bond

A  surety bond is different from insurance in many ways. If you have a insurance claim the principal pays the deductible and the insurance company covers the rest of the claim. With surety bonds if you have a claim, the surety restores the obligee to it’s original condition then the principal must restore the surety company to its original state. A surety bond involves three parties the first party is the obligee, the second party is the  principal and the third party is the surety company.

How does it work?

So basically a bond works like this. The surety assumes liability for the principal if the principal fails to perform its obligations to the obligee.

What is a principal?

The Principal is the primary party who will be performing the contractual obligations. When applying for the bond the principal’s credit, financials and experience will be used to determine surety credit.

What is a surety company?

A surety company is the third party that will be backing the principal in the event of a claim. A surety company is regulated by the department of insurance. If a bond is needed for a federal license or federal contract the surety must be registered and approved by the Department of treasury and on the circular 570 list.

What is an obligee?

The obligee is the party that requires the principal to obtain bonding. The surety bond protects the obligee not the principal.

Who requires bonding?

Bonding can be required by pretty much anyone, but normally bonding is required in connection to a license or permit. These bonds are simply known as license and permit bonds. The State or Federal government will not grant your business license until the license bond is procured.  Surety bonds can also be required to guarantee that the construction of a project will be completed. These bonds are known as Performance and payment bonds.

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Tax Bonds are Surety Bonds

Wednesday, April 7th, 2010

After April 15, your business may need a tax bond. A tax bond is a surety bond that is usually required by the State. Some of these bonds are needed the day you start your business others expire at the end of the year.  The majority of tax bonds are required for retail businesses guaranteeing the payment of sales taxes to the obligee.

Different types of tax bonds

Tax Bonds for restaurants :

There are many different types of tax bonds.  Some tax bonds are required for restaurants or bars to guarantee the payment of alcohol taxes. These bonds are also known as liquor bonds and alcohol bonds.

Penalty Bonds :

Some tax bonds are considered penalty bonds because your business was late on paying it’s  taxes.

Sales Tax Bonds :

The bond amount for Sales tax bonds is either based off your projected gross income or the bond amount is already preset by the obligee. There are even Tax Bonds required by contractors to guarantee that your will pay your taxes on the materials your purchased wholesale.

How much does a Tax Bond Cost?

The cost of the surety bond can vary depending on the bond language, credit, financial stability and the State.

What to do if you need this Surety Bond?

The first thing that the surety will need is an application.  Filling out the application should take five minutes or less.  The surety will review your credit, financial stability to determine surety credit.   After the application is completed you should receive an approval within the same day or the following day.

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Florida MVD Surety Bond April 30

Tuesday, April 6th, 2010

Florida MVD bonds expire April 30 of ever year.

What is A Florida MVD Bond?

A MVD is a surety bond. Surety bonds are required to fulfill a licensing requirement or financial obligation. Bonds protect the obligee,  from fraud, breach of contract and in some cases certain payments. Check your state Statutes referenced in your Surety Bond form to see what applies to you.

Who is requiring the Bond?

Florida MVD Bonds are required by The State of Florida department of Highway Safety and Motor Vehicles. This is the Obligee. A Obligee is the  one that is requiring the bond.  The Principal is the person or the business applying for the surety bond.

What does it do?

Taken from the Florida bond form

“WHEREAS, such bond shall be in favor of any person in a retail or wholesale transaction who shall suffer any loss as a result of any violation of the conditions herein above contained. NOW, THEREFORE, if the above named principal shall fully comply with the conditions of any written contract made by him as such dealer in connection with the sale or exchange of any motor vehicles, and shall pay or cause to be paid to any person in a retail or wholesale transaction any loss or damages which such person shall sustain as a result of any failure to comply with the conditions of any written contract made by such dealer in connection with the sale or exchange of any motor vehicle or as a result of any violation of the provisions of Chapter 319 or 320, Florida Statutes, in the conduct of the business of which he is licensed, then this obligation shall be void, otherwise to remain in full force and effect.

Basically if you violate the law the damaged party can file a claim and recoup their loses.

What happens if you have a claim?

If you have a claim and the surety pays out you must pay back the surety for the lose.

Surety bonds are underwritten similar to a loan. The surety reviews your credit and financials to determine surety credit.

How much do Surety Bonds cost?

Surety bonds for these bonds can start at 1% for good credit and qualifying assets. For clients that have issues rates can be anywhere from 3% to 20%.

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Surety Bond Cost

Thursday, May 7th, 2009

We must first understand what a surety bond does as well as the factors that are involved that will determine the rate as well as obtaining a surety bond approval. The surety company will evaluate your credit, experience, and financials. The process is very similar to apply for a business loan. Rates vary on a multitude of conditions such as which state is it for, what type of surety bond is needed, what is the financial outlook for the company or individual, how much experience does the business have and of course, which surety company is writing it.


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