Sign contractor bonds, also known as sign permit bonds, are legally binding agreements between three parties: contractors that fabricate or install signs, the government agency responsible for regulating local sign contractors, and a surety company.
The government agency is the Obligee and establishes the obligations that the sign contractor (the Principal) must follow. The surety (also called bonding company) issues the bond guaranteeing the performance of the sign contractor.
Sign contractor bonds are required in some states for eligibility to fabricate or install signs or any related wiring onto posts or poles. When the surety company issues the bond, they provide the government agency a guarantee that they will receive payment for financial losses resulting from a violation of the statutes and regulations set forth by the sign contractor license.
If the sign contractor fails to meet the obligations set out by the government agency, the surety will pay out any damages up to the bond amount. The sign contractor is ultimately liable for the losses and is legally required to reimburse the surety company for any damages paid under the bond.
Sign contractor 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 sign contractor bonds typically cost between 1% and 5% of the total bond amount. Sign contractor bonds may require credit checks but it is ultimately the surety company's decision how to underwrite the bond.
During the application process, the surety company evaluates your financial strength and industry experience. For bonds requiring credit checks, applicants with good credit generally receive the lowest rates, however, bad credit will not prevent you from securing a sign contractor 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 sign contractor surety bonds in popular states.