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A surety bond is a financial instrument that protects against financial loss stemming from an adverse event that disrupts or prevents a contract from being completed. A surety bond company assumes the liability for the debt, default, or failure of the principal to the obligee. They are purchased by the principal to reassure the obligee that there is a safety net of sorts to complete a contract should the principal suddenly become incapable of living up to it.
For example, a hospital (the obligee) that wants to build a new wing would require the construction company it hired (the principal) to purchase a surety bond large enough to cover the size of the construction project budget in case some detrimental incident occurs that prevents the construction company from completing the job.
While it is an insurance product, it is not traditional insurance. A surety is between three parties; business insurance is between two. Business insurance is security for your business. In contrast, a surety is like a contractor taking out a performance guarantee for the security of their client.
We explored 16 companies to find these six best surety bond companies in categories important to you. We identified which types of bonds they offer and whether the company had a specialty. We asked how long the bonds lasted, their costs, and what other products and services the company offered.
Best Overall : Surety Bonds Direct
Surety Bonds Direct, our best overall surety bond company, shops the market to get you the best pricing, delivers the same or next day, and can fulfill over 150 bond types.
150 bond types in 50 states
Free, no-obligation quote takes two minutes
Provides completed bond form, typically only requires your signature
Same or next-day bonds
Does not offer other insurance products
No bail bonds
At the top of the heap of the best surety bond companies stands Surety Bonds Direct, our overall winner, which provides access to a wide array of surety bonds nationwide, a best-price hunting model, and a done-for-you surety bond in your hands as soon as the same day you apply.
Finding the best-priced surety bonds from the country’s most-respected surety companies is all that Surety Bonds Direct does. Some of the 150 types of bonds they offer include Freight Broker, Contractor License, Auto Dealer License, Insurance Adjuster, and Mortgage Broker.
The cost and term of the bonds vary depending on the type of bond, the state in which the bond is needed, and, on some occasions, the credit status of the applicants. The costs can range from 1% to 12% of the bond amount. For example, with a 750 credit score, a $20,000 surety bond may qualify for a 1% rate, making your premium cost $200. If your credit score is 600, that same bond could carry a 5% rate and a $1,000 premium cost. You can get a quick estimate of your bond cost by using the online calculator. Bond duration varies and could be one year, two years, or more.
Unlike other agencies that also offer various insurance products, the company specializes in surety bonds alone.
Best Construction Bonds : MG Surety Bonds
For construction bonds, MG Surety Bonds sits at the front of the class because it has specialized in this complex type of bond since the 1960s as part of the Miller Group.
Expertise with construction
Apply online, by phone, or by email at your convenience
Does not offer other types of insurance products
Manual calculation on contractor work in the progress report
Construction bonds can have several layers to them, so we chose MG Surety Bonds as our best resource for construction bonds thanks to their experience and focus on these intricate products. Construction bonds include:
In addition to construction, MG Surety also has an added specialty in the oil and gas industry.
MG Surety Bonds offers a variety of surety options with different costs and terms depending on the contractor’s credit report, trade, the rate, the amount of the surety, and the length of time it is needed. Typically the term is set for 12 months, and each additional month costs the contractor a 1% surcharge to the premium.
For example, using Class B General Construction, a 12-month duration, and a $2.5 million bond, the tiered progressive calculation of the premium would look like this:
- First $100,000 of Contract Price $25/$1,000 = $2,500
- Next $400,000 of Contract Price $15/$1,000 = $6,000
- Next $2,000,000 of Contract Price $10/$1,000 = $20,000
- Total premium for this project would add up to = $28,500
If the contractor needed to extend this an additional three months:
- Three months x 1% per month = 3%
- You would then take the original premium of $28,500 and multiply it by 3% (0.03), which would equal a surcharge of $855.
- Total cost of this bond becomes $28,500 + $855 = $29,355.
MG Surety Bonds is a broker and only offers surety bonds.
Best Contract Bonds : Bryant Surety Bonds
Bryant Surety Bonds stood out as the best for contract bonds due to its presence nationwide, lower rates, money-back guarantee, and its access to specialty programs that many competitors can’t touch.
Available in all 50 states
Easy online application
Offers a 24-hour turnaround time
Bad credit programs available
Does not offer other insurance products
Extra delivery expense to bonded party when due
With a coast-to-coast presence, a 100% money-back guarantee, and relationships with over 20 A-Rated, U.S. Treasury-Listed markets that enable them to offer several specialty programs, Bryant Surety Bonds is our best choice for contract bonds.
In addition to their expertise in contract and performance bonds, Bryant Surety can source a variety of bonds on license and permit, construction, freight broker, court, and fidelity bonds to name a few. They also have a bad credit surety bond program available for commercial bonds.
The cost of the contract bond depends on the type of surety bond, the risk associated with it, and the applicant’s credit history and business background. For a credit score above 650, plan on your premium costing between 1% and 3% of the required bond amount.
This company specializes only in the surety bond niche and does not provide other insurance products and services.
Best Commercial Bonds : Gallagher
Gallagher is the industry leader for commercial bonds because of its global experience, extensive relationships at all major surety companies, and their in-house underwriting expertise that enables them to craft custom solutions for their clients.
Expanded surety programs
Creative product blends
May undergo manual review causing some delay
Big company that may be more difficult to navigate for someone new to surety bonds
No cost estimate calculator on website
Earning our top vote for best commercial bonds, Gallagher provides smart and effective programs for its commercial surety clients thanks to its in-house underwriting skills and its relationships with the world’s most respected surety companies.
Gallagher focuses on commercial surety in the health care, higher education, financial services, construction, and public utilities industries (both the private and public sectors). Their commercial bonds include license and permit, court, public official, and customs bonds.
Cost and terms of bonds differ based on the state that requires the bond, the specific type of bond, industry, size of bond amount, and the credit history of the business. Gallagher is a broker, so they perform by creating a single point of contact for principals while they find the best-fitting, lowest-price surety products from the marketplace. Bond rates will range from 1% to 10% of the bond price. Terms will start at 12 months but can be tailored to longer durations from the outset, or as add-on surcharges.
Best Probate Bonds : SuretyBonds.com
SuretyBonds.com wins our best probate bonds title due to their clear and concise educational explanations on their website and their expertise in probate bonds across all 50 states.
Surety bond calculator link does not take you to a quick calculator like other sites
We value SuretyBonds.com highly for their nationwide service coverage and clear-cut explanations, making them our best for probate bonds.
A probate bond is required when an individual is appointed by the court to act on behalf of others, as a caregiver for example, or to manage someone’s assets. A custodian bond, which is a type of probate bond, ensures an appointed custodian will care for an individual and his or her finances ethically and according to directions endorsed by a court ruling. These bonds are frequently required of court-appointed custodians who care for minors, the elderly, or disabled individuals to protect them from fraud, embezzlement, or other illegal acts.
In addition to probate bonds, the company offers license and permit bonds, construction bonds, commercial bonds, and court bonds. The probate bond costs and terms vary depending on the amount of coverage needed. The premiums are typically calculated at just 0.5% or $5 per thousand for the first $250,000 of coverage.
SuretyBonds.com exclusively works in the surety bond industry and is licensed in all 50 states.
Best Value : BondsExpress.com
BondsExpress.com ranks as our best value for surety bonds because their website and process is free of fluff, filled with education, and has a robust list of bond types for all 50 states, including pre-approved bonds.
Web-based surety service
Pre-approved bonds with no credit check
Underwriting on some bonds completed in one hour
Website appearance is dated
The online quote form would be more helpful if it had a drop-down list so the applicant can select their bond type
Direct and to the point, yet still loaded with a helpful glossary of terms, BondsExpress.com offers the best value for applicants seeking a quick application and approval process. Many of their bonds are pre-approved. No matter in which state you live and work, you can buy a surety bond from BondsExpress.com. They bring value to their clients by approving many people and businesses that have been turned down elsewhere, within hours, with comprehensive underwriting.
BondsExpress.com offers a wide variety of commercial bond types, including programs for bad or no credit. Motor Vehicle Dealers with bad credit can get bonds with rates as low as 5%. In addition, they specialize in contractor performance and bid bonds, which they offer with no minimum requirements on financial history, credit score, or net worth. In order to strengthen your application so that you’re not seen as just a poor credit score, their underwriters review your business history, background in your field, and reputation in your industry. So if you’ve been turned down for a bond at other companies, you may still have hope at BondsExpress.com.
To request a quote, apply online. Some sample prices of their bonds include:
- New York City Employment Agency Bond for $5,000 with a two-year term costs $175
- A City of Boston Construction Contractor Bond for $500,000 for one year costs $5,000
- A California Tax Preparer Bond for $5,000 for a three-year duration costs $50
BondsExpress.com only provides surety bonds and is licensed in all 50 states plus Washington, D.C.
We found surety brokers to be the best surety bond companies because the heart of their business is saving you valuable time. They shop the marketplace for you to get you the best rates, coverage, and duration. They are often able to get you pricing without a “middleman” cost because they buy bonds in bulk at a discount from the large insurance companies, and pass that discount on to you.
Our favorite overall, Surety Bonds Direct, has a clean, easy-to-navigate website and a simple bond cost estimate calculator. They are licensed in all 50 states and can offer thousands of bond types.
|Company||Why We Picked It||Best Features|
|Surety Bonds Direct||Best Overall||Wholesale pricing; thousands of bonds; every state; easy-to-use website|
|MG Surety Bonds||Best Construction Bonds||Construction bond expertise; respected in the industry|
|Bryant Surety Bonds||Best Contract Bonds||100% money-back guarantee; customized specialty bonds|
|Gallagher||Best Commercial Bonds||Large, respected company; broader services than most surety bond specialists; in-house underwriting|
|SuretyBonds.com||Best Probate Bonds||Expertise in probate bonds; high-quality education on website with clear explanations|
|BondsExpress.com||Best Value||Several pre-approved bonds; one-hour approval|
What Is a Surety Bond?
A surety bond is a written agreement that guarantees compliance, payment, or performance of an act. There are thousands of different kinds of surety bonds. They are designed to reduce the risk to the parties in case of failure or disruption to the written agreement. Most bonds are issued for a set term, typically one year, but sometimes two or three. There are also “continuous” bonds that remain in force until they are cancelled by the surety company.
How Does a Surety Bond Work?
A surety bond is a contract between three parties: the principal (the person applying for the bond), the surety (the company that issues the bond), and the obligee (the entity that requires the bond). The surety company will review the experience, licenses, and credit of both the business and the owner before they issue a bond.
The application then will be given a risk category and a corresponding premium based on the underwriter’s review and the surety company’s rate system. The premium is the price the principal pays once their application is approved. The obligee can file a claim to recover losses if the principal fails to perform the act as agreed. The surety company will work with both the principal and the obligee to determine whether the obligee’s claim is valid.
Some surety bonds protect the public, not the principal. For example, a Notary Bond protects the public against negligence, misconduct, or other types of non-performance caused by a Notary Public either voluntarily or involuntarily. In a case where a Notary is at fault, the Notary Bond is a financial guarantee to reimburse the harmed party, up to the value of the Notary Bond.
Is a Surety Bond Insurance?
While a surety bond covers the obligee against financial harm, it is not insurance. Insurance is a risk-management contract between two parties, the person or business being insured and the insurance company. An insurance policy guarantees that the insured or a third party will be compensated by the insurance company when a loss that is covered in the insurance contract occurs.
A surety bond is also a contract to manage risk, but between three parties. The bond guarantees that the principal will perform the act, and if they don’t, the obligee can recover their losses from the surety. A surety bond must be paid back by the principal if the surety company is forced to pay a claim to the obligee, or to a third party in the case of a Notary Bond. In contrast, insurance does not need to be repaid by the policyholder as a result of a claim.
What Does a Surety Bond Cost?
In simplest terms, surety bond costs are most often determined by multiplying the amount of coverage by the rate. For example, a $100,000 with a 1% rate will cost the principal $1,000. This $1,000 is called the premium.
Another variable that can affect the cost of a bond include the type of surety bond requested. Some industries and contracts are considered higher risks than others, so that can affect the rate and premium. The applicant’s credit score, experience, and financial history will also influence the assigned rate. Rates generally range from 1% to 12%.
How We Chose the Best Surety Bond Companies
We studied 16 surety bond companies to find these six category winners. We wanted to see a wide offering of surety bonds across several industries. If a company impressed us, but didn’t have a broad scope, then they had to demonstrate a deep expertise in the specialty category where they won. We favored surety bond companies that had an easy-to-use website, a simple online quoting process, and promised a same-day or next-day turnaround. Finally, we looked for business models that included wholesale pricing within a respected surety marketplace.