Laundry And Laundromat Bonds
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What you need to know about Laundry And Laundromat Bonds
Laundry bonds (also known as laundromat bonds) are legally binding agreements between three parties: laundromats (or dry cleaners), the government agency responsible for regulating local laundromats, and a surety company.
The government agency is the Obligee and establishes the obligations that the laundromat (the Principal) must follow. The surety (also called bonding company) issues the bond guaranteeing the performance of the laundromat.
Laundry bonds are required in certain states for eligibility to obtain a license to operate a laundromat or dry cleaning service. The bonds help protect customers who store their clothing at the laundry service’s facility. Some states handle laundromat licensing directly while others allow local municipalities to handle licensing.
When the surety company issues the bond, they provide the government agency a guarantee that the customers of a licensed laundry service will receive payment for financial losses resulting from a violation of the statutes and regulations set forth by the retail laundry license.
If the laundry service fails to meet the obligations set out by the government agency, the surety will pay out any damages up to the bond amount. The laundry service is ultimately liable for the losses and is legally required to reimburse the surety company for any damages paid under the bond.
Laundry 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 laundry bonds typically cost between 1% and 5% of the total bond amount. Laundry 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 laundry bond. EZ Surety still offers competitive rates to individuals with low credit scores or other financial issues.
You’ll know if you need a surety bond because some entity will have required you to obtain one. They must also inform you of which specific bond type you’ll need. There are thousands of bonds across the country, all of which vary by state and industry.
Visit EZSuretyBonds.com to browse hundreds of bonds by state, type, or industry.
