Surety Bonds
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Surety bonds cost

Surety bond costs are primarily determined by the value of the bond. Your industry risk and credit history can also affect your premium rate.

How much do small businesses pay for surety bonds?

Surety bonds guarantee your customer will receive financial reimbursement if your business fails to fulfill the terms of a contract.

The cost of a surety bond varies widely, based on your bond amount and the scope of your business and your liabilities. Your premium rate can range anywhere from 1%-15% of the total bond amount.

Clients (also called the obligee) may require proof of a surety bond before signing a contract with your small business. It also may be required by state law or to obtain a license.

Common types of surety bonds include fidelity bonds, janitorial bonds, performance bonds, and court bonds.

How does bond amount impact the costs of a surety bond?

In general, the premium you pay for any commercial bond primarily depends on the amount of the bond.

For example, a bonding company might decide to charge you a 1% surety bond premium. That means a $2,000 bond would cost $20, and a $10,000 bond would cost $100 annually.

Even within your profession you may see different types of surety bonds, which may have different bond requirements and costs. Other types of bonds include:

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What other factors affect the cost of surety bonds?

The price of a surety bond is a set percent of the bond amount. However, several additional factors will also affect how much you'll pay.

Your insurance provider will look at your credit history, industry, and state laws.

How does your credit score impact costs?

A surety bond is more similar to a line of credit than an insurance policy. The money must be paid back if you use it. That's why your personal credit score is important.

As part of the bonding process, the surety company's underwriters will look at the applicant's credit score and financial statements to determine their premium rate. A bad credit rating will increase the amount you pay. Most bonds cost between 1% and 3.5% of the total bond amount, depending on your credit status.

If you have poor credit, you can probably still get a bond – however, you will have a higher premium rate than those with good credit. Having an excellent credit score helps keep costs low, as it shows the surety bond company they can count on you to pay back the amount if needed.

How do industry risks influence costs?

A business’ industry and the type of bond, such as construction bonds or contractor license bonds, can impact the overall bond price.

Higher risk businesses, such as construction companies, may have to pay a higher percentage of the surety bond amount (for example, 10% or more) as a premium. Surety bond rates for a lower risk business could be as little as 1% of the bond's value.

In addition to paying a higher rate, some professions, such as auto dealers, also need bigger bonds because of their profession's sizeable risks. This is often dependent on your state. For example, California requires a motor vehicle dealer bond of $50,000.

How do state laws affect costs?

In addition to mandating the size of some bonds, state laws also set the cost of bonds for certain professions, such as notary bond costs.

For example, Florida state law requires a four-year bond of $7,500 for notaries public at a cost of $69. Wisconsin requires a four-year $500 notary bond at a cost of $20.

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Business insurance and bonds protect your business from financial losses and help you win clients.

Why do small businesses choose Insureon?

Insureon is the #1 independent agency for online delivery of small business insurance. We help business owners compare coverage options from top-rated providers, buy policies, and manage their insurance online.

By completing Insureon’s easy online application today, you can compare free quotes for surety bonds and other types of insurance from top-rated U.S. carriers. Insureon insurance agents are available to help answer any questions related to your business needs.

Once you find the right policy, you can begin coverage in less than 24 hours and get a certificate of insurance for your small business.

Learn more about business insurance costs

Insurance premiums vary based on the policies a business buys. See our small business insurance cost overview or explore costs for a specific type of business insurance policy.

Updated: September 21, 2023
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