Health club bonds are legally binding agreements between three parties: spa and health club owners, the government agency responsible for regulating local health clubs, and a surety company.
The government agency is the Obligee and establishes the obligations that the health club (the Principal) must follow. The surety (also called bonding company) issues the bond guaranteeing the performance of the health club.
Health club bonds are required in some states before being eligible to obtain a license to operate a health club, health spa, self-defense school, or any other fitness facility that offers prepaid memberships. The bonds ensure that the facilities comply with industry standards and that the customers' investments are protected. Some states where you need a surety bond include California, Florida, and New York.
When the surety company issues the bond, they provide the government agency a guarantee that the customers and suppliers of a licensed health club will receive payment for financial losses if the club ceases operations.
If the health club were to go out of business, the surety would pay out any damages up to the bond amount. The health club is ultimately liable for the losses and is legally required to reimburse the surety company for any damages paid under the bond.
Health club surety bond costs vary depending on the total bond amount and the premium rate. The government agency sets the required bond amount and the surety company determines your premium rate, which is the percentage of the total bond amount you pay as the premium.
Premium rates for health club bonds typically cost between 3% and 5% of the total bond amount. Most health club bonds require credit checks. During the application process, the surety company evaluates your financial strength and industry experience. Applicants with good credit generally receive the lowest rates, however, bad credit will not prevent you from securing a health club bond. EZ Surety still offers competitive rates to individuals with low credit scores or other financial issues.
Below are the lowest premiums EZ Surety has issued for health club surety bonds in popular states.