What is a yacht broker bond?
A yacht broker bond is a type of license and permit bond required in a few states, including Florida, California, and Maryland. Anyone wishing to run a yacht or ship-selling business in one of these states must obtain a bond to receive their operating license. Additionally, individual employees engaging in sales may need to post a yacht salesman bond.
Yacht broker bonds protect customers who could suffer losses if the yacht broker acts dishonestly or illegally. If the broker fails to follow state rules and regulations governing the industry, the party that suffers damages may file a claim on the bond. The injured party should receive fair compensation for their losses if the claim is valid.
Other names for this bond include:
- Yacht and ship broker bond
- Watercraft dealer bond
- Yacht dealer bond
- Boat dealer bond
Get Your Yacht Broker Bond:
- A yacht broker bond is required in a few states, including Florida, California, and Maryland.
- Anyone wishing to run a yacht or ship-selling business in one of these states must obtain a bond to receive their operating license.
- Yacht broker bonds offer protection for customers who could suffer losses if the yacht broker acts dishonestly or illegally.
Who needs a yacht broker bond?
Certain states require yacht brokers to be bonded before being issued a business license.
Ship and yacht brokers in California must post a $15,000 bond per the state’s Division of Boating and Waterways.
If you want to operate as a yacht or ship broker in Florida, you must obtain a $25,000 bond, according to the Department of Business and Professional Regulation.
If you plan to work in Maryland as a yacht broker, you must show proof of surety before your license application is approved. Plan to post a $20,000 bond the first year. For each consecutive year, your bond requirement could range anywhere from $5,000 to $200,000 based on your annual sales volume.
|Surety Bond Amount||Annual Sales Volume|
|$5,000||$500,000 or less|
|$10,000||> $500,000 but < $1 million|
|$20,000||> $1 million but < $3 million|
|$50,000||> $3 million but < $5 million|
|$100,000||> $5 million but < $10 million|
|$150,000||> $10 million but < $15 million|
|$200,000||$15 million or greater|
How do yacht broker bonds work?
A yacht broker bond is a three-party contract involving an obligee, a principal, and a surety.
- Obligee: The state authority that issues the license and requires a bond
- Principal: The yacht brokering business
- Surety: The financial company that issues the bond
How much does a yacht broker bond cost?
The cost of your premium will depend on the bond size you need. You will pay a small percentage of the bond amount either annually or every other year, depending on your state. If you have a good credit score and strong financials, you could pay as little as 1% of the bond amount. For example, if you live in California and need a $15,000 bond, you might pay $150.
Generally, the better your credit score, the lower your premium rate. Expect to pay anywhere from 1-5% if you have good credit. Many yacht broker bonds are continuous, which means you must keep your bond active for as long as you plan to operate your business. Renew your bond each year before it expires to remain in good standing in your state.
Frequently Asked Questions
If you have a low credit score, you may still be able to get bonded at an affordable rate. Expect to pay a higher percentage of the bond requirement.
Anyone who engages in business with a yacht broker has the right to file a claim if necessary. For example, if a broker acts dishonestly in a business transaction or commits fraud, the party that loses money may file a claim.
When a claim is filed, the surety company investigates to determine if it’s valid or not. If it is, the surety can pay for the damages immediately to compensate the claimant. Then the surety will collect the claim amount from the yacht broker – who is fully responsible for paying them back.
How to Get a Yacht Broker Bond in Your State
ZipBonds offers the fastest and most secure option for getting the surety bonds you need. Our all-digital platform is intuitive and straightforward. Apply today online or call us at (888) 435-4191 to speak with an agent directly.
Founders Ryan Swalve and Zach Mefferd formed the vision for ZipBonds.com when they realized how overly complicated it was to help clients place surety. The frustration of being unable to incorporate the technology they’d used in other insurance-focused projects left them thinking “there has to be a better way.”
Fast forward a couple of years, and that better way is the impetus of everything we do at ZipBonds. We constantly look for innovative ways to improve the bonding process for our clients and agents. Our team comprises individuals who understand all angles of surety – for companies, agencies, and individuals. Incorporating everyone’s point of view to improve the process while simultaneously integrating cutting-edge technology is what sets our business apart.