Prime Insurance Agency we have one goal in mind â€“ to guide you towards your best bonding option, while providing top customer service.
We represent the most reputable and prominent companies in the industry, and these relationships allows us to negotiate the lowest rates with the top carriers in the country.
Whether you are in need of a license bond to be compliant or a contractor in need of a bid in a timely fashion, our staff is here to make the bonding process absolutely seamless. Don't risk purchasing a bond that is not acceptable to the obligee, our friendly and professional staff will ensure you get the correct bond issued properly, the first time.
Whether you have an immediate need for a bond or just want to learn more, we can help. Contact us now for assistance.
Surety Bond Definition
A bond guarantees the fulfillment of a legal obligation. It's a three-party agreement where the third party (surety company) guarantees to a second party (obligee or owner) the successful performance of the first party (principal). One of the primary uses of bonds today is to protect public and private funds from financial loss.
A surety bond is not an insurance policy. An insurance policy assumes that there will be a loss, so the premium for an insurance policy is calculated to cover losses that will occur. A bond, on the other hand, is an extension of credit with the assumption that the legal obligation will be fulfilled, and consequently, there will be no loss. The bond premium paid to the surety covers only the underwriting expenses of the surety company. When losses occur, they have a significant impact on the surety company's financial results.
Types of Surety Bonds
Different surety needs are met by different classes of surety bonds:
A Contract Bond guarantees that an entity awarded a contract will meet its obligations under that contract. Included in this group are bid bonds, performance bonds, payment bonds, maintenance bonds and supply bonds.
A Commercial Surety Bond can guarantee a variety of business obligations which require surety bonds. Commercial Surety Bonds include all non-contract surety bonds, including numerous types of license and permit, miscellaneous and court bonds.
License & Permit Bonds guarantee that individuals granted a license or permit to operate a business or to exercise a privilege will meet the obligations under that license or permit.
Miscellaneous Bonds guarantee a variety of non-classifiable obligations. These include utility, lost securities, workers compensation premium payments, and sales tax payments.
A Court Bond guarantees that an individual will comply with the terms of the court. This includes probate and fiduciary bonds, as well as bail and immigration bonds.
How Surety Bonds Work
Surety bonds are a risk transfer mechanism. The risk of doing business with the principal is shifted from the obligee to the surety company. Federal, state and local governments often require surety bonds to guarantee that business owners and individuals will comply with various laws protecting public funds. For example, license bonds protect the public from business misconduct. Contract bonds protect taxpayers by guaranteeing that projects are completed properly, on time and without liens. Court, public official, government and miscellaneous bonds protect and secure public funds and private interests.
To get a surety bond, you need to submit an application. We thenwill check your credit and may check other references as well to calculate the cost of issuing you the bond. Depending on the amount the bond covers and the results of the credit and reference checks, you'll have to pay between 1 percent and 20 percent, or possibly more, of the cost of the bond. Once the bond is approved and you've signed the bond agreement, you'll receive your bond in a day or two.
Consult With a Surety Bond Specialist to Save Time and Money
If youâ€™ve got a stellar credit score, a mediocre or poor one, or youâ€™re not sure of your credit score, itâ€™s always a good idea to consult with a surety bond specialist. Theyâ€™ll be able to provide counsel as to what specific surety bond requirements are necessary in your state. Consulting with surety bond providers will save you timeâ€”youâ€™ll avoid applying for a general or non-applicable bond type and waiting for your agent to follow up with specific questions. Surety agents simplify the bond application process and provide specific solutions for your bond needsâ€”most importantly, they do so in minutes, not hours or days.
If Your Credit is Subpar, Avoid â€œQuick Quotesâ€
Many agents offer â€œQuick Quotesâ€, though they arenâ€™t always QUICK and they arenâ€™t always applicable if you have less than perfect credit. In the majority of cases, Quick Quotes pricing solely applies to ideal applicants. Donâ€™t waste time with Quick Quotes â€”after filling out a Quick Quote application, youâ€™ll have to wait for an agent to get in contact with you, then fill out your bond application and wait for your quote.
How To Apply for a Surety Bond with Poor Credit
Applicants with good credit are favored when applying for surety bondsâ€”individuals with a credit score of 650 and above, and no prior history of tax liens and bankruptcy. Realistically, there are many individuals applying for surety bonds who donâ€™t meet credit criteria. Surety agents are able to offer them alternatives, perfect for individuals with low credit, no credit history, or poor credit. For these types of surety bonds, you can expect to pay a higher rate than standard bonds. In some cases, a collateral of cash is necessary to supplement the risk.
There is a growing market for high-risk surety bonds with lower rates for individuals who have less than perfect credit. A good surety bond provider will specialize in offering applicants the lowest rates possible for their specific credit scenario. Contact a surety specialist to learn more about how almost all applicants qualify for a bond.