Surety Bond Rates

The basic definition of a surety bond is one that involves three people or parties. There is the principal, who is attaining security against payment default. There is the obligee, the party who the money, or in some cases work, is owed to. The third person involved is the surety, who has promised to pay a specified amount if the principal fails to do so. Surety bond rates can range widely, on average anywhere from one to nine percent often based on circumstances and credit.

There are many different situations in which a surety bond may be needed. The most obvious to most people is the bail surety bond. This type of bond is issued by a professional called a bondsman. The bond is a promise that the principal will be at their specified court date. If they are not, the surety pays the specified amount of money to the court. For example, let’s say a person gets arrested and is able to be freed upon a $5000 bond.

Usually a percent of that, for example, $500, is required to secure the bail bondsman. When the sum is paid and the bond is posted, the person in jail can go free until their trial. But, if they do not show up in court when they are supposed to, the person who put up the bond (a relative, spouse, friend, etc.) will be liable for the entire $5,000. This is just an example; actual bail amounts vary a great deal from case to case.

There are also surety bonds for new businesses. These are called license surety bonds. The business owner acts as the principal who requests surety to demonstrate they will adhere to all the legal and ethical requirements of their business license. When a contractor or other business states they are ‘bonded’ this is what it means. The obligee to whom the money would be paid is the municipality or other government organization from which the license is obtained. This type of bond is very popular with contracting companies as many customers find a ‘licensed and bonded’ contractor more trustworthy than one who is not.

Surety bonds also extend to other areas, such as probate. A probate bond must be acquired for the executor of either a minor or an estate to ensure things are carried out as specified. Some bonds are obtained by public officials. These are to make sure that an elected or appointed public official will follow all the rules and regulations set forth by lawmakers.

As you can see, there are a variety of different surety bonds, some of which are issued by insurance companies. The exception to this would be the bail bond. Some bonds are credit based, an individual with good credit would get a low interest rate on their bond while one with bad credit would pay a higher rate. So just as the kinds of surety bonds vary, so do surety bond rates. Check around with various bond issuing companies to obtain quotes, as specified previously the only time you may not be able to do this is if you are seeking a bail bond as insurance companies do not issue these, they are handled by a professional called a bondsman that can be found in the business section of your phone directory.

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