So, you’ve been required to purchase a surety bond. At Jet, we have the most comprehensive database in the industry with over 9,000 surety bonds offered. Click the quote button to get started!
With Jet, you’re working directly with the decision-maker. We eliminate middlemen to deliver a streamlined process and low rates.
There are several factors that determine the bond premium (cost), including:
These factors allow the surety company (Jet) to appropriately assign a bond rate by looking at the risk associated with each applicant. The cost is only ever a small percentage of the bond limit. The bond limit is assigned by the obligee (regulator) and is the total amount a claim can be filed for, which we get into later.
A review of financials is sometimes required for large limit and high-risk bonds to be approved for a rate. Contract bonds are a prime example of this as the limits are generally over $100,000.
Jet’s pricing provides options that work for everyone. Choose from convenient monthly payments or discounted annual and multi-year terms. Those applying with Jet can complete the application, get a quote, and purchase their bond within minutes.
To learn more about surety bond pricing, refer to the Factors That Determine Your Surety Bond Cost article.
A surety bond is a guarantee that compensation is available to anyone financially harmed by the actions of the principal (bondholder). Surety bonds are enforced for several projects, contracts, professions, etc.
You still may be wondering, well, if I comply with the rules, regulations, and laws, why is a surety bond required? Even if someone has several years in business with no disciplinary action, that doesn’t mean it won’t happen in the future. In fact, the longer you’re in business, the more likely you are to have a claim against you. Heck, people that follow the laws still have disputes against them, although they are able to resolve the issue before a claim happens.
The surety bond provides reassurance to the public and the person or entity regulating the bond that there is financial recompense immediately available through the surety company in the event of a claim—more on that later.
Three parties are involved in a surety bond:
The obligee can be a city, county, or state regulatory agency, but it can also be a company or an individual.
The surety company is the financial backer in the case of a bond claim (which we dive into more later). By providing the bond, the surety company is guaranteeing that funds are readily available to be paid out for valid bond claims.
The principal is responsible for upholding their obligations, whether it be a contract, permit, license, or another form of agreement.
License bonds (permit bonds) are required for those obtaining a license or permit from a city, county, or state regulatory agency.
Think of the Department of Motor Vehicles (I know, we don’t like the thought of that, either)—they oversee licensing of car dealers in several states which must hold an auto dealer bond throughout the duration of their operations.
Other types of license bonds include contractor license bonds and mortgage lender bonds.
Plaintiffs and defendants going through certain court processes must file a surety bond. These court bonds ensure the plaintiff or defendant (whichever holds the bond) will be held accountable for their actions throughout the process. A few bonds that fall under this category are appeal bonds, replevin and counter replevin bonds, and lien bonds.
Probate bonds, sometimes referred to as fiduciary bonds, include those for administrators and executors of estates, conservators and guardians, and trustees. Those that hold these positions are responsible for major decisions and must uphold their obligations to the will, trust, or other mandated requirements.
ERISA bonds, janitorial services bonds, business services bonds, financial guarantee bonds, and employee dishonesty bonds fall under the category of fidelity bonds.
These bonds operate a little differently than your typical surety bond. They provide protection to the company in the event their employee commits fraud.
Most large local, state, and federal construction projects require the contractor to hold a contract bond, also known as a performance bond. This would be in addition to any state bond requirement, such as the California $25,000 contractor license bond.
Underwriting on these bonds is based on the contractor’s ability to complete the project according to the contract. Certain criteria are taken into consideration, including the project cost, the contractor’s past project experience, and the financial capacity of the contractor.
A contract bond is not needed until the contractor has won the contract. A bid bond may be first needed to bid on the project, which does not cost the contractor. Once awarded the contract, a contract/performance bond is required and a payment bond may be required in addition, which guarantees all labor and materials will be paid for.
Surety bonds are required in several states for those wishing to be notary publics. The notary bond affords the public protection from the notary in cases where the notary fails to fulfill their duties and commits a dishonest or fraudulent act.
When hiring a member from a local union, a wage and welfare bond (union bond) is often mandated to ensure the union member will receive their appropriate dues. These bonds are also known as fringe benefits bonds, union bonds, employee wage and benefits bonds, or a combination of these.
The bond limit for these bonds is generally based on the number of reportable hours per month or hired union contractors. Other times, it is a set amount determined by the union.
Sometimes, bonds don’t fall under one of the above categories but still carry significant importance. Take for example freight broker bonds (ICC broker bonds), fuel tax bonds, sales tax bonds, and DMEPOS bonds (medicare bonds), to name a few.
With over 9,000 surety bond types, Jet’s application guides you through the process.
For a full list of bonds, visit our services page.
Avoiding a claim means following the obligations of your license, permit, contract, etc. However, claims do happen. Oftentimes, before a claim is filed, a complaint or dispute is started. This information is passed to you by the customer themselves or the obligee.
This is when you, as the principal should address the issue to the best ability so further disciplinary action is not taken. Here are a few examples of claims for different bond types.
|Bond Type||Claim Example|
|Motor Vehicle Dealer Bond||Failing to deliver a valid vehicle title upon purchase|
|Contractor License Bond||Leaving a project ½ completed and refusing to finish|
|Performance Bond||Not paying subcontractors their wages or using faulty materials|
|Probate Bond||Unable to account for missing funds in an estate’s account|
If a valid claim is filed to the surety company against the bond, it’s the responsibility under the terms of the bond for the surety company to provide payment to the claimant(s), up to the bond limit.
The process doesn’t end there. Surety bonds are unlike your typical insurance policy that covers the policyholder for accidents. Bonds only provide payouts when there has been an avoidable action committed by the principal which has led to a person or entity’s financial distress. Because of this, the principal is liable to pay the surety company back for the paid-out claim amount. Failing to do so will result in further punitive action, such as fees and the inability to renew a license, permit, registration, etc. in the future.
What separates Jet from other surety companies is our direct model. Rather than utilizing middlemen agents and brokers, we provide the surety bond directly to you. We don’t just sell you the bond and wish you luck—we are with you every step of the way, from bond purchase to renewal to the claim process (should it be needed).
Refer to our Surety Bond Claims Guide for additional bond claim information.