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Learn more about conduct surety bonds, and apply today. Single Source Insurance offers surety bonds nationwide through a convenient online application system.
Conduct bonds are unique to the state of Texas and are a requirement of the Texas Alcoholic Beverage Commission. Consequently, they are also referred to as TABC surety bonds. A conduct bond guarantees compliance with the TABC�s rules and other state laws related to alcoholic beverages. This protects both the state and consumers against harm resulting from the unlawful or unethical actions of a bonded business.
Retailers who 1) do not have a Food and Beverage certificate but serve alcoholic beverages, or 2) derive most of their revenue from the sale of alcoholic beverages, must obtain a conduct bond in order to obtain and keep their business license or permit.
Surety bond contracts bind three parties together in a contractual relationship, and conduct bonds are no different. The TABC, as the party requiring the bond, is the obligee. The retailer purchasing the conduct bond is the principal. And the company underwriting and issuing the bond is the surety.
The state has the right to place a claim against the bond of a principal that has violated the TABC�s rules and regulations. The surety will validate the claim and then pay the claim up to the full amount of the bond. Surety bonds include an indemnity clause, however, that legally obligates the principal to reimburse the surety for the amount paid out on the claim.
The required bond amount is set by the TABC and depends on how far the principal�s business is from the nearest public school. If the nearest school is over 1,000 feet from the retail location, the bond amount is $5,000. If there is a public school closer than 1,000 feet, the required bond amount is $10,000.
The principle will pay only a small percentage of the required bond amount as the annual bond premium. The surety will establish that percentage, the premium rate, depending on an applicant�s credit score and financial standing. Applicants with good credit and in good financial standing will pay the standard market rate of 3% or less of the bond amount.
If you�ve been informed by the TABC that you need to purchase a conduct bond for your retail business, use our convenient online application process or call us for help obtaining your bond.
