Surety Bond FAQ Center

A surety bond is a three-party financial guarantee where a surety company backs your promise to fulfill specific obligations. Unlike insurance that protects you, bonds protect others from your potential failure to meet contractual or legal requirements.

Surety bond premiums typically range from 1-15% of the bond amount annually. License bonds often cost 1-5%, while contract bonds range from 0.5-3% depending on your financials, credit, and experience.

License bonds (contractor, notary) can be instant with no underwriting. Contract bonds typically take 1-5 business days depending on complexity and your financial documentation.

Yes, many bonds are available with poor credit. License bonds often have no credit check, while contract bonds may require higher premiums or additional collateral for applicants with credit issues.

Most BMC-84 bonds are approved within 24 hours. Emergency processing is available for urgent compliance needs. You'll receive your bond certificate immediately upon approval.

FMCSA can impose penalties exceeding $16,000 per day for operating without proper bonding. These penalties continue until compliance is restored, making immediate bond acquisition critical.

Your annual premium is determined primarily by personal credit score. Excellent credit (750+) qualifies for rates starting at $938/year, while challenged credit may require up to $15,000/year.

No. You cannot legally operate as a freight broker without an active BMC-84 bond filed with FMCSA. Operating without bonding violates federal regulations and subjects you to severe penalties.

The surety investigates and may pay valid claims up to $75,000. You're responsible for reimbursing the surety. Our partnership with Scopelitis Transportation Law provides expert claims defense.

Yes. You also need BOC-3 process agent designation, FMCSA authority registration, and ongoing compliance with federal regulations. Some states have additional requirements.

Payment bonds protect subcontractors, suppliers, and laborers - not the contractor who purchases the bond. When the general contractor fails to pay, these parties can file claims against the bond to receive payment for their work.

Payment bond premiums typically range from 0.5% to 4% of the contract amount annually. Costs depend on your credit score, experience, and financial strength. A $1 million project might cost $5,000-$40,000 per year in premiums.

Federal law requires payment bonds on government projects exceeding $150,000 under the Miller Act. State requirements vary from $25,000 to $250,000 thresholds. Private projects may require them at owner discretion.

Payment bonds guarantee subcontractors get paid, while performance bonds ensure project completion. They're typically required together on public projects, with performance bonds protecting owners and payment bonds protecting subcontractors.

Yes, first-tier subcontractors can file directly. Second-tier subcontractors must provide written notice within 90 days of their last work to maintain claim rights. The process and timeframes vary by jurisdiction.

Most payment bonds under $500,000 require no collateral for qualified contractors. Larger bonds or higher-risk applicants may need collateral such as cash, letters of credit, or other financial security.