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How much does a surety bond on a contract cost?

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Answered 2006-07-25 21:47:08

The general rule is 10% of the amount of the bond as the starting point and can be negotiated downward.

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How much does a 2500 surety bond cost?

Surety Bonds are all based off your individual credit score. So, if you have good credit then your rate will be lower vs. someone who has bad credit.

How much 25000 surety bond?

Your Motor Vehicle Dealer License Bond cost is directly related to your credit and experience rates can start as low as $250 and go as high as $5000. You should know that unlike insurance, not all surety applicants can be bonded.

How much is the surety bond?

Most license & permit surety bonds will run an average of 1-3% premium depending on the type and bond amount however if credit is an issue they can get quite a bit more expensive

How would you determine how much of a surety bond is needed?

As a principal at -- one of the nation's leading surety bond producers -- this is a question that I answer frequently. Because you posted in the Cars & Vehicles category, I assume that you need an auto dealer/motor vehicle dealer surety bond for your state. The best way to find out the required amount of your surety bond is to contact your state's government agency that handles licensing and registration for your industry. For example, if you're an auto dealer in Arizona, you'll contact the Arizona Department of Transportation. No matter what type of surety bond you need and what state you'll practice business in, inquiring with the government agency about the required bond amount is always a great place to start. Often, these government agencies will have this information on their websites. Once you know your required bond amount, you can contact a reputable surety bond producer -- such as -- to purchase your bond. The amount you pay for your bond will depend on your credit score, the type of bond you need, the state for which you need the bond and a few other factors.

What does it mean to bond a company?

This is one type of bonding of a contracting company, but it will give you some idea as to why companies have a bond. hat should I consider when choosing a surety bonding? What should I consider when choosing a surety bonding company? Company? Posted On: Wednesday January 28th, 2004 at 12:00am EST SUMMARY A surety bond is a guarantee from a surety bonding agency that a contractor will complete an agreement; you will not be liable if the contractor does not complete the agreement. When choosing a surety bonding company, you need to take into consideration its reputation, experience and bonding process. What should I consider when choosing a surety bonding company? A surety bond is a three-party agreement between a surety company, an owner (obligee) and a principle (contractor). In this type of bond, the surety company insures the obligee that the principle will fulfill a contract. When a surety bond is used in the construction industry, it is called a contract surety bond. Business owners acquire surety bonds because they want to be sure that a contract is going to manage his enterprise well, deal fairly, perform obligations in a timely manner and keep promises. Business owners also pursue surety bonds because they provide protection in case the contractor defaults on the contract. Surety bonding is considered a part of the insurance industry, but it shares some characteristics with the bank credit industry. However, the surety company's primary duty is not to lend the contractor money. Instead, the surety company uses its financial resources to stand behind, or back, the contractor's commitment and ability to complete a contract. The surety bond is advantageous for the business owner because it assures that the contracted work will be completed, and protection will be provided if it is not. Surety bond companies charge a premium for prequalifying or underwriting the contractor. Unlike insurance companies, surety companies do not charge deductibles based on the probability of loss, because surety companies do not expect a loss to occur. Surety bonding companies do extensive research on the contractors that they bond. They request a list of good references from the contractor, as well as proof that the contractor has experience fulfilling the requirements of contracts. Surety bond companies will also evaluate a contractor's ability to obtain equipment necessary to carry out work, the contractor's financial ability to hire necessary employees, the contractor's credit history and the contractor's current bank relationships and lines of credit. Having this information will allows you, as a business owner, to make a good decision in hiring a contractor. A surety bond will also help convince architects, lenders and other principles on the project that the chosen contractor will complete the duties and contracts as assigned. Because the surety bonding company plays such an important role in assuring that your contractor will complete his contract, it is important to carefully consider what bonding company you will choose. If you have never used a surety bonding company before, it will probably be a good idea to find other small business owners in your area who have used surety bonding companies and ask them who they recommend and why. Make a list of these names and do your own 'research'-find out what contractors they bond, and track down other businesspersons who have used their services. After compiling a list of potential surety bonding companies, you will want to check with the U.S. Treasury Department or similar agency in your state to assure that the agencies are licensed for bonding. Some bonding agencies are contained within larger insurance agencies, so you will also want to find out if they have an agent to handle surety bonds specifically or if they use any agent available to draft surety bonds. It is also important to ask your surety bonding agency what screening they perform on contractors. Do they conduct background checks? Do they gather business reference? What is the upper monetary limit of their bonding services? How long have they been in the bonding business? What are their policies if contractors default on an agreement? Are they registered with the state Insurance authorities and/or the federal Treasury Department? The surety company is the primary risk-taker in the three-way bonding agreement, and so will want to thoroughly investigate your business plans and information about your business before bonding a contractor to do work with you. It is important to provide as much information as you can to the surety agency so they can properly underwrite the contractor and make sure you are protected from liability in case the contractor defaults on your agreement. A good surety bonding agency will charge a premium for underwriting your contractor and project, and will publish what their premium rates are. If a surety company does not publish their premiums or rates, you should contact your state's Insurance office to assure that they are licensed and comply with all state and federal regulations. Perhaps the most important thing to remember when choosing a surety bonding company is ensuring that you have open lines of communication. You need to choose a surety bonding agent you can talk to about your business concerns-and the bonding agent needs to be able to listen to you, and address your concerns to your satisfaction. Again, other businesspersons will likely be very useful to you in your bonding agency search. You may also want to ask contractors who have submitted bids to you what surety bonding agencies they have used in the past.

How much is a surety bond?

Most license & permit surety bonds will run an average of 1-3% premium depending on the type and bond amount however if credit is an issue they can get quite a bit more expensive. Contact me today to find out options to high premium such as co-signers and/or collateral.

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How much does it cost to purchase the surety bond required to become an auto dealer in Washington State?

A $30,000 bond is required to become an auto dealer in the State of Washington. Rates may vary from carrier to carrier, however I just wrote an auto bond for $300 per year. Craig Baerwaldt Allstate - Cascadia Agency 425-353-1499

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