How do you get a FL surety bond?
Surety bonds in Florida are legally binding agreements that ensure obligations are met. There are three parties involved in the contract:
- The principal: The party that must fulfill the obligation.
- The obligee: The party that needs a guarantee the principal will perform.
- The surety: The party that issues the bond to guarantee the performance of the principal. If the principal fails to meet the agreed obligations, the surety will pay out claimed losses up to the bond amount with the principal ultimately liable for those losses.
The process in Florida begins when the obligee informs you or your business a surety bond is required. You must then research the type of bond that you need and its specific requirements. From there, you will apply online for the bond through a surety company or agency.
The surety company will require you to provide personal and business information such as names, addresses, social security numbers, and employee identification numbers. Their underwriters will use this information to review your financial health to assess the risk of issuing you the bond.
After your application is approved, you will receive a surety bond quote with the bond premium (which is another name for the price of the bond and which varies depending on the amount of bond coverage you applied for). If you accept the quote, you pay the premium and the surety company issues you the bond.
Who needs a surety bond in Florida?
The State of Florida requires different surety bonds across a variety of industries. There are two primary categories for these bonds; contract bonds and commercial bonds.
Contract Surety Bonds provide project owners assurance that contractors will perform their work properly. There are different types of contract bonds, including performance bonds which protect the project owner from financial loss if the contractor fails to perform in accordance with the agreement.
Contract Surety Bonds are most common in the construction industry but can also be used for janitorial services, transportation, and security services.
Commercial Bonds are often related to a specific license or permit and are required by the state of Florida and other municipal entities to ensure businesses conform to the regulations in place to protect the general public. Some of the most common bond types include:
- Motor Vehicle Dealer Bonds: The Florida Department of Highway Safety and Motor Vehicles requires a surety bond to sell used or new motor vehicles in the state.
- Contractor License Bonds: These bonds are required by the Florida Department of Business and Professional Regulation (DBPR) to ensure that a contractor complies with laws relating to their field.
- Mortgage Broker Bonds: The State Of Florida Office Of Financial Regulation requires Mortgage Broker Bonds to guarantee industry standards and regulatory compliance.
- Freight Broker Bonds: These bonds are required by the Federal Motor Carrier Safety Administration (FMCSA) to legally operate as a transportation broker.
- Sales Tax Bonds: Sales Tax Bonds are required by the Florida Department Of Revenue to ensure business owners comply with sales tax laws.
- Notary Bonds: The State of Florida requires surety bonds to ensure notary publics perform their function as an unbiased and impartial witness.
- Alcohol Bonds: The State Of Florida DBPR requires surety bonds to ensure that businesses licensed to sell alcohol comply with all taxes and regulations.
How much does a surety bond cost in Florida?
Surety bond costs vary depending on the bond amount and the premium rate. The obligee sets the required bond amount and the surety determines your premium rate, which is the percentage of the total bond amount you pay as the premium.
Premium rates for surety bonds tend to range between 1% and 15%. When determining your premium rate, the surety company evaluates your credit history, financial statements, industry experience, and licensing history. The better your financial standing, the better rate you will receive. Bad credit can result in higher premiums and make it harder to secure certain bonds.
Below are the costs for some of the more popular surety bonds in the state of Florida.
- State of Florida Motor Vehicle Dealer (Used) Bond: Auto dealers selling used motor vehicles are required by the FLHSMV to post a surety bond of $25,000. EZ Surety can offer premiums for these bonds as low as $225, issued instantly.
- Contractor License Bond: Various cities in the State of Florida require contractors to post a surety bond to guarantee performance. The total amount for these bonds will vary depending on location with most starting at $5,000. EZ Surety can issue these bonds for a premium as low as $85, subject to underwriting.
- State of Florida Mortgage Broker Bond: Mortgage brokers are required by the Florida Office of Financial Regulation to post a surety bond of $10,000. EZ Surety Bonds can offer premiums for these bonds as low as $100, issued instantly.