If you’re a business owner, contractor, or other professional, you may be required to get bonded at some point in your career. But what exactly does that mean? And how can you get the bonds you need as quickly and easily as possible?
We’ll walk you through five simple steps to getting bonded, clearing up common points of confusion (and frustration) along the way.
What does it mean to get bonded?
Being bonded means you have purchased a surety bond, a three-party agreement between you (the principal), the surety bond company, and the entity that requires you to get the bond (the obligee). The surety bond serves as a guarantee that you will fulfill your obligations according to the terms of the bond contract.
Surety bonds are typically required by government agencies, financial institutions, and other businesses to ensure that contractors, fiduciaries, and others will fulfill their obligations. If you fail to meet those obligations, the bond provides financial protection to the obligee (typically a government agency or private party).
For example, many states require contractors and professionals to obtain a license bond before they can begin working in the state. Various construction bonds are required of contractors to ensure they follow contracts accordingly. And court bonds hold individuals accountable to the law as they fulfill different roles.
How to Get Bonded in 7 Easy Steps
Follow this general process to obtain your first surety bond.
1. Do some research.
Research the type of bond you need, the requirements (such as bond amount), and state regulations for your industry. This will help you understand the bond process and associated costs.
We’ve produced a library of content explaining how different types of bonds work. You can use the search bar in the top right corner of the screen to search for a specific bond. Or pick up the phone and call us (888-435-4191)! We’d be happy to explain how your surety bond works and the requirements for your industry, state, or municipality.
2. Reach out to a bond provider.
It’s important to choose a reputable surety bond company to work with. The right bond provider can help you understand the bond process and find the right bond for your needs. Make sure the provider checks each box in this list:
- Financially sound
- Authorized and licensed to sell bonds in your state
- Expertise in your industry
- Experience selling the type of surety bond you need
3. Find the bond you need.
Determine the type and amount of bond required. Different types of bonds have different requirements, and the bond amount can vary depending on the project or industry. If you have any questions, just ask your bond provider.
4. Apply for your surety bond.
Once you know which bond you need, you can complete the bond application with the surety provider you’d like to work with. The application process will vary depending on the bond provider, but you will typically need to provide information about your business, financial history, and credit score. This isn’t always the case, however. Some bonds don’t require much information and can be issued without a credit check.
5. Wait for approval.
After you’ve submitted your application, the surety bond company will underwrite the bond and review your application. You’ll be approved for the bond if you meet the underwriting criteria. Approval can take anywhere from a few minutes to a few days or even weeks, depending on the bond company. ZipBonds processes and approves many bonds almost instantly!
6. Receive your bond.
After approval, the surety bond company will issue your surety bond (a legal contract outlining the terms you must follow). You can then present the bond to your obligee as proof of coverage.
7. Keep your bond up to date.
Surety bonds have a set expiration date. You will need to renew your bond before it expires to avoid any lapses in coverage. You can renew your bond by contacting your bond provider. Some providers (including Zip) notify you months in advance when it’s time to renew your bond so you don’t miss the deadline.
How Much Surety Bonds Cost
The cost of getting bonded varies depending on the type of bond, the bond amount, and your creditworthiness. Generally, the bond premium is a small percentage of the bond amount, ranging from 1% to 10%.
A higher bond amount or lower credit score may result in a higher bond premium. However, a reputable surety bond provider can help you find competitive rates and work with you to find the best options for your budget.
Get the Surety Bonds You Need with ZipBonds
Contact the ZipBonds team to apply for your surety bond today! We offer thousands of bonds, including court, construction, fidelity, and license and permit bonds. You can always reach us by calling (888) 435-4191 or emailing email@example.com. We’ll help you get bonded in a zip.