A surety bond is a comprehensive risk management tool used in countless industries across America.
Businesses like contractors, car dealerships, credit services, health clubs, medical device suppliers, auctioneers and others are required to hold bonds on the federal, state and/or municipal level.
Even solopreneurs like acupuncturists and notary publics are required to hold a surety bond in some states in order to be in business.
A surety bond is a legally binding contract between 3 parties:
- Principal – similar to an “insured”
- If the principal fails to complete its obligations, the surety will step in to fulfill those obligations according to the terms of the contract and the bond.
- Obligee – the entity requiring the bond
- Surety Company – the company guaranteeing the bond, usually an insurance company.
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With over 50,000 types of surety bonds in the United States alone, requirements vary drastically by state and span across multiple industries, from freight and transportation to mortgage and finance.
A few examples include:
- In Florida, a travel seller is required to hold a Seller of Travel surety bond ranging from $10,000 to $50,000 depending on the services they offer.
- In Texas, a credit services company must file a surety bond in the amount of $10,000.
- In New York State, a car dealership must post a surety bond in the amount of $20,000, $50,000 or $100,000 depending on various factors.
- In New York City, a home improvement contractor must have a surety bond of $20,000 to be licensed.
- In New Jersey, a health club must hold a surety bond of no less than $25,000, up to $50,000
- Federally, a beer brewery must hold a surety bond of $1,000 (if they have an excise tax liability below $50,000).
Additionally, there are four main categories of surety bonds:
- Commercial
- Judicial
- Contract
- Probate Court
Do you know which one you need? Click here to obtain your bond!
Luckily, we’ve made it easy to obtain a bond in 5 steps. Just click here!
We work closely with Propeller Bonds, a company that aggregates several markets all A-rated by A.M. Best.
If you need more information on bonds, reach out to your Account Executive, send an email to info@toofer.com, give us a call 203.834.5900, or chat below. We look forward to hearing from you!