Month: May 2019

Not everyone who applies for a surety bond will be approved. Additionally, of all the applicants who are approved, some will pay a much higher premium for a bond than others. That�s because the primary consideration in evaluating surety bond applications is the applicant�s personal credit score. A high risk surety bond is simply a surety bond underwritten by a surety company that is willing to work with people who are credit-challenged.

If you have poor credit and need to get bonded, contact Single Source Insurance today. We can work with you to get you the bonds you need.

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Why Are They Needed?

Without high risk surety bonds, people with past credit problems, including bankruptcies, judgments, or liens might not be able to get the surety bond they need in order to obtain a business license, work on publicly funded construction projects, serve as the guardian for a minor, or take on any other job or responsibility that requires bonding.

You might be wondering why your credit score matters if you have enough money to pay the bond premium. The problem is that if you violate any of the terms and conditions of your bond�for example, by failing to comply with a state law regulating your industry�anyone who suffers a financial loss as a result of your actions can file a claim against your bond.

If that happens, the surety company that issued the bond will step up and pay the claimant on your behalf. But that payment is essentially a loan to you, which must be repaid in full. That�s what the surety company is concerned about�whether you have enough money to reimburse them for any claims they pay for you or are creditworthy enough to borrow the money elsewhere to reimburse them.

What Do They Cost?

There are two factors that enter into the premium calculation for any surety bond: the required amount of the bond (known as the bond�s penal amount) and the premium rate. The penal amount is established by the bond�s obligee�the party requiring the bond. The premium rate is set for each applicant by the surety (the company underwriting and issuing the bond).

The rate paid by applicants with good credit is referred to as the standard market rate, which is between 1% and 3% of the full penal amount of the bond. The rate for individuals with poor credit, however, can be as high as 5% to 15% of the bond�s penal amount. Some sureties allow applicants to pay for their bonds in installments rather than a single premium payment for the entire year or bond period.

Is Collateral Required?

In some cases, the surety may require an applicant to put up collateral to ensure reimbursement for claims paid by the surety. When collateral is required, it may be as much as the full penal amount of the bond.

Bad Credit? You Can Still Get Bonded

At Single Source Insurance, we make it easy to get a bond, even with bad credit. If you have credit issues that could put you in the high risk category, we can still work with you. Apply online today!

Surety bonds are required for a number of different purposes�in order to obtain a business license, to be awarded a construction contract, or to satisfy a court order, for example. They serve as the bonded individual�s pledge to act in accordance with all relevant laws, rules, and regulations, as spelled out in the surety bond contract. But how long are they good for? Let�s take a look.

Understanding the Costs of High-Risk Surety Bonds

Regardless of the purpose of a given bond, all surety bonds involve three parties who are bound together by a surety bond agreement. The obligee is the party who requires the bond and establishes the maximum amount that the bonded individual must pay to claimants. The principal is the party who is required to obtain the surety bond and maintain it for a specified period of time. The surety is the party that underwrites and issues the bond and renews it as needed.

During the period of time that the bond is in effect, a party who is harmed financially by the unlawful or unethical actions of the principal may file a claim against the bond. The surety verifies the validity of each claim before paying it as an advance on behalf of the principal. Ultimately, however, the principal is financially responsible for claims and must reimburse the surety for all payments made to claimants.

How Long Are They Good For?

License & Permit Bonds

Many of the surety bonds issued are license and permit bonds that must be purchased as part of the process of becoming licensed to conduct business in a particular profession. If you work in a profession or occupation that requires licensing in order for you to operate legally in your state, you’re likely to be required to obtain this type of bond. For example, all states have their own requirements for licensing as a motor vehicle dealer, and they all involve the purchase of a surety bond.

In such cases, there must be a bond in place at all times to avoid license revocation. This typically means renewing the bond at every license renewal to maintain continuous coverage. The bond agreement may specify a bond term length of one year or more, as long as the premium for the entire period is paid up front. The specific time period of your bond will be determined by the bond type and any regulations in place. For questions, contact our knowledgeable agents today.

Construction Bonds

Construction bonds typically have a coverage period for the entire duration of the construction project, though there can be some that extend beyond a project completion date. For questions, contact our knowledgeable agents today.

Court Bonds

Court bonds must be effective for as long as it takes to resolve the legal matter the principal is involved in. Or, the bond period may be specified for as long as the principal has fiduciary responsibility—for example as the guardian of a minor or executor of a state. For questions, contact our knowledgeable agents today.

Your Responsibility To Renew

Whatever the duration of the coverage period, it�s the principal�s responsibility to respond to the renewal notice from the surety and renew the bond by its expiration date. The surety will review the same factors considered when setting the premium for the original bond purchase and calculate the renewal premium that must be paid to keep the bond in force.

Get The Bonds You Need

Single Source Insurance offers a wide range of bonds with convenient online applications. We�ll work with you to get a surety bond with the coverage period you need.

Are you wondering how to qualify for a surety bond? Read this post! This guide should tell you everything you need to know. If you have any questions, don�t hesitate to contact our knowledgeable agents.

What Are Surety Bonds?

A surety bond is the purchaser�s guarantee to abide by relevant laws, rules, and regulations or pay the price, so to speak. These requirements are spelled out in the terms and conditions of the surety bond agreement. The bond provides funds to compensate parties who suffer a financial loss caused by the unlawful or unethical actions of the bonded individual.

Though surety bonds are often confused with insurance policies, they are fundamentally different. The main difference lies in who benefits in the event of a claim. While an insurance policy pays a monetary benefit to the policyholder, a surety bond pays claims filed by those injured by the bonded individual. It�s important to understand that distinction.

Understanding the Costs of High-Risk Surety Bonds

The three parties to a surety bond agreement are:

• The obligee (the party that requires the purchase of a surety bond)
• The principal (the party purchasing the bond)
• The surety (the party underwriting and issuing the bond)

The obligee establishes the required amount of the bond, also referred to as the penal amount. This is the total amount of money guaranteed to pay claims against the bond.

The principal pays the surety a premium to obtain the bond, which is good for a predetermined period of time. If within that period of time the principal violates the terms and conditions of the bond, any party who suffers a financial loss as a consequence has the right to file a claim against the bond.

The surety will ensure that any claim is valid before paying it. However, the ultimate legal responsibility for paying claims rests with the principal, who must reimburse the surety for the amount paid out on the claim. This is price the principal pays for having failed to live up to the terms of the surety bond.

How Do I Qualify?

The surety�s main concerns in evaluating a surety bond application include:

• Whether the applicant is likely to incur claims
• Whether the applicant has the ability to reimburse the surety for any claims paid

The key factors the surety looks at when qualifying applicants are:

• The applicant�s personal credit score
• Personal and business finances
• Assets
• Resumes or other evidence of industry experience and professional reputation

These factors all may enter into the surety�s approval of an application. But what typically determines the premium you will pay for the bond, is your credit score. The higher that is, the lower the premium you will pay.

Get Qualified Today

Want to know if you qualify? Simply apply for a bond with Single Source Insurance online. We offer a wide range of bond types with quick turnarounds.

You may be familiar with surety bonds, but do you know how the process really works? Don�t worry, we�ve got you covered. Here�s a useful guide to help you understand what surety bonds are and how the process works.

For all of your bonding needs, Single Source Insurance is here. We offer a wide range of bonds with convenient online applications nationwide.

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What Is A Surety Bond?

A surety bond is a contract binding together three parties: an obligee, a principal, and a surety. Each of these parties has specific rights and responsibilities that are spelled out in the terms and conditions of the surety bond. The obligee is the party requiring the bond, the principal is the party required to purchase the bond, and the surety is the company that underwrites and issues the bond.

The purpose of a surety bond is to protect the obligee against financial loss resulting from the principal�s failure to live up to the terms of the bond agreement. The bond serves as the principal�s pledge to act in accordance with relevant laws, rules, and regulations and to make whole any party that incurs a financial loss due to the principal�s unlawful or unethical practices.

Who Needs Them?

Surety bonds are used for a wide variety of purposes in a wide variety of fields and industries. They are most commonly required as part of the process of becoming licensed in a particular profession (license and permit bonds), for construction contractors bidding and working on projects (construction or contractor bonds), and in legal proceedings (court bonds).

There are a variety of bonds available. Explore by category at Single Source Insurance:

• Construction Bonds
• Commercial Bonds
• Court Bonds
• License & Permit Bonds

Understanding the Costs of High-Risk Surety Bonds

Surety bonds are often mistakenly thought of as a form of insurance, but that�s not the case. While insurance protects the insured from financial loss, a surety bond protects others and obligates the principal to compensate them for their loss. In the event that the principal does not comply with the terms and conditions of the bond agreement, any party that suffers a financial loss as a consequence may file a claim against the surety bond.

When a claim is filed, the surety investigates to determine whether it is warranted. Upon determining that a claim is valid, the surety typically pays it on behalf of the principal and is subsequently reimbursed by the principal. An indemnification clause in the surety bond contract ensures that the surety can recover the amount of the claim from the principal.

How Much Do They Cost?

The principal pays a premium to obtain a surety bond. That premium is a small percentage of the full penal amount of the bond. While the penal amount of the bond is set by the obligee, the premium rate is determined by the surety based on certain underwriting factors. The most significant factor used in determining the premium is the principal�s credit score.

Bond applicants with good credit generally pay a premium rate of between 1% and 3%, which is the standard market rate. Those with poor credit may still be able to get bonded but will pay a higher premium rate.

Get The Bonds You Need

Whatever type of surety bond you may need, our experienced surety professionals are here to help you. Explore our site to quickly find the bonds you need, and apply online today.