What is a driving school bond?
Driving school bonds are legally binding agreements between three parties: driving schools, the government agency responsible for regulating local driver education, and a surety company. The government agency typically responsible for requiring driving school bonds is the local Department of Motor Vehicles (DMV).
The government agency is the Obligee and establishes the obligations that the driving school (the Principal) must follow. The surety (also called bonding company) issues the bond guaranteeing the performance of the driving school.
Why do you need a driving school bond?
Driving school bonds are required in some states for eligibility to obtain a license to operate a driver education or training school. The surety bond helps protect the students’ prepaid tuition from potential fraud by the driving school. Some states where you need a surety bond include California, New Jersey, New Mexico, and Texas.
When the surety company issues the bond, they provide the government agency a guarantee that the customers of a licensed driving school will receive payment for financial losses resulting from a violation of the statutes and regulations set forth by the driving school license.
If the driving school fails to meet the obligations set out by the government agency, the surety will pay out any damages up to the bond amount. The driving school is ultimately liable for the losses and is legally required to reimburse the surety company for any damages paid under the bond.
How much does a driving school bond cost?
Driving school 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 driving school bonds typically cost between 1% and 5% of the total bond amount. Most driving school bonds require credit checks. During the application process, the surety company will evaluate 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 driving school 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 driving school surety bonds in popular states.
- EZ Surety has issued driving school bonds in the State of Georgia for premiums as low as $100.
- EZ Surety has issued driving school bonds in the State of South Carolina for premiums as low as $100.