How Much Does A Surety Bond Cost?

Surety bonds include a variety of types such as commercial, contract, and court surety bonds. Each type serves a unique purpose and consequently has a different cost.

The cost of a surety bond can fluctuate depending on the type. For example:

Payment bonds typically carry higher rates compared to bonds for permit or license compliance.

The cost of license surety bonds typically ranges between 1% and 10% of the total bond amount.

Some surety bonds, like the Legal Document Assistant Bond in California, have fixed rates and do not need a credit check.

These examples showcase the cost variations among different bond types.

Commercial Surety Bonds

Businesses and contractors use commercial surety bonds to guarantee contract performance and for licensing and permitting purposes. The cost of these bonds varies according to the bond type and industry-specific requirements. For example, janitorial bonds, which are influenced by the bond amount and business liabilities, or auto dealers requiring larger bonds due to high industry risks, will have different costs.

License and permit bond requirements and costs are affected by state laws and the nature of the business. For instance, federal requirements like freight broker bonds have standardized amounts across states, further influencing the cost of commercial surety bonds.

Contract Surety Bonds

Also known as construction bonds, contract surety bonds are typically required by state or federal government to enable contractors to secure contracts or bid on public construction projects. Some private parties also require these bonds, including bid bonds. Usually, the cost of construction bonds falls within 1% to 3% of the bond amount. However, this range can be influenced by factors such as the specific type of bond and the associated risks, potentially leading to premiums from 1% to more than 10% in high-risk industries like construction.

For public and government construction projects, contract surety bonds and related costs are often established based on the full contract amount. For instance, statutes such as the Federal Miller Act mandate bonds for contracts exceeding $100,000, indicating a more stringent regulation beyond state guidelines.

Court Surety Bonds

Court surety bonds are employed in legal proceedings to guarantee contract fulfillment, debt payment, or other legal obligations, and to secure an individual’s release from jail before trial. The cost of these bonds can be influenced by state legislation and the specific type of bond required, with costs varying significantly between different states and types of legal proceedings.

For example, in Florida, the required bond for notaries public is $7,500 at a cost of $69, and in Wisconsin, a four-year $500 notary bond costs $20. Conversely, the California Legal Document Assistant Bond has a fixed premium that lasts for two years. While court bonds typically range between 0.5% to 1% of the bond amount, there are situations where the cost is standardized across all applicants, suggesting that some court surety bonds do not vary in price based on the applicant’s credit history.