How Much Does a Surety Bond Cost?


Written by:  Howmuchisit.org Staff
Last Updated:  August 9, 2018

A surety bond is a three-party agreement among the surety company, the contractor (principal), and the owner (obligee) and is often required for many government jobs, construction jobs or even by the court system in order to protect the consumers.

The surety company assures the owner, through the surety bond, that the contractor will perform the contract.  A surety bond is not an insurance policy, although the issuing party of the surety bond is most often an insurance company.  It is the owner who specifies the bond agreement in the contract documents.

The contractor or principal assumes the obligations to fulfill the contract agreement between them and the owner, while the owner is the recipient of the obligation.

The surety company is simply the go-between of the other two parties, making sure that everything is done fairly in a timely manner.

How much does a surety bond cost?

On average, a surety bond can range anywhere from as low as 1.5% to as much as 20% of the bond face value.  Those who have a credit score over 700 will usually be within 1.5 to 5% range, while those with scores between 600 and 700 could pay around 3% to 15%.  The credit score can play a vital role with the pricing.

The cost of a surety bond varies according to the bond type, the applicant’s credit history, the risk, the amount of the bond and the geographical location where the bond is required.

Bond Rate
Bond Amount
        
$10,000$15,000
$20,000$25,000$30,000$35,000$40,000$45,000$50,000
1%
$100
$150
$200
$250
$300
$350
$400
$450
$500
2%
$200
$300
$400
$500
$600
$700
$800
$900
$1,000
3%
$300
$450
$600
$750
$900
$1,050
$1,200
$1,350
$1,500
4%
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
$1,800
$2,000
5%
$500
$750
$1,000
$1,250
$1,500
$1,750
$2,000
$2,250
$2,500
6%
$600
$900
$1,200
$1,500
$1,800
$2,100
$2,400
$2,700
$3,000
7%
$700
$1,050
$1,400
$1,750
$2,100
$2,450
$2,800
$3,150
$3,500
8%
$800
$1,200
$1,600
$2,000
$2,400
$2,800
$3,200
$3,600
$4,000
9%
$900
$1,350
$1,800
$2,250
$2,700
$3,150
$3,600
$4,050
$4,500
10%
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
$4,000
$4,500
$5,000
11%
$1,100
$1,650
$2,200
$2,750
$3,300
$3,850
$4,400
$4,950
$5,500
12%
$1,200$1,800$2,400
$3,000
$3,600
$4,200
$4,800
$5,400
$6,000
13%
$1,300$1,950$2,600
$3,250
$3,900
$4,550
$5,200
$5,850
$6,500
14%
$1,400$2,100$2,800
$3,500
$4,200
$4,900
$5,600
$6,300
$7,000
15%
$1,500$2,250$3,000
$3,750
$4,500
$5,250
$6,000
$6,750
$7,500

Our table below offers an example of what you may pay based on your credit score:

Bond Amount680 and up (great)680 - 600 (okay score)599 or less (bad score)
$5,000$50$150$250 to $600
$15,000$150$450$600 to $1,800
$25,000$250$700$1,000 to $3,000
$40,000$400$1,000$2,000 to $5,000
$50,000$500$1,500$2,000 to $6,000
$75,000$750$2,000$4,000 to $10,000
$100,000$1,000$3,000$5,000 to $13,000

As explained in yet another table, understand that there are certain types of surety bonds that are more expensive than others.

TypeCost
Car Dealer BondRequired before someone can open a car dealership and often range from 1 to 15 percent of your total bond amount.
Lost Title BondThe cost will depend on the vehicle the applicant is titling. In most cases, states require a lost title bond in the amount of two times the value of the car being titled.
Notary BondDepending on the size of the bond, the costs can range from $50 to $200 per year.
Performance BondOften purchased by construction contractors who won a bid. Depending on the scope of the project, the costs are generally within the 0.5 to 2 percent of the bond value range.

Typically, an applicant with good credit history will have a surety bond of around 1% to 4% of the total bond amount needed, according to AllSuretyBonds.com.

According to SuretyBonds.org, the surety bond for standard market rates is from 1% to 3% of the total bond, while for high-risk market rates the fee is around 4% to 15%.

Surety Solutions LLC says there are thousands of surety bonds, each with its own cost structure, but on average, according to the website, you will pay one to 15 percent of the total bond amount, and as we mentioned, it will greatly depend on your credit score, the type of bond, the amount of the bond and your risk.

What are the extra costs?

Additional fees may apply on top of the estimates mentioned above.  This may include an agency fee to cover the cost of issuing the bond, a credit check fee and/or any additional costs associated with the bond.  Talk with the surety bond company before signing up to know which fees are going to be applied.

Tips to know:

A surety bond and insurance are different.  An insurance policy will protect you from risk while a surety bond will protect you in the case of an unexpected failure.  Like a credit card, a bond will only have to be paid back if the principal fails to complete the project, protecting the obligee.

Surety bonds can be easily confused with fidelity bonds.  The surety bond guarantees against loss through the failure of performance, while a fidelity bond guarantees against loss through dishonesty.

You can get a surety bond at any surety agency licensed by your state.

How can I save money?

Like shopping for a loan, compare rates with at least three to five surety bond companies before signing up.  Whether it’s online or in person,

As much as possible, improve your credit score to receive the lowest premium possible.


Advertising Disclosure: This content may include referral links. Please read our disclosure policy for more info.

Null

Average Reported Cost: $0

0 %
0 %
Less Expensive $1 $1.5K $3K $5K $6.5K More Expensive $8k

How much did you spend?

Was it worth it?  

About Us | Contact Us | Privacy Policy | Amazon Affiliate Disclosure
Copyright © 2018 | Proudly affiliated with the T2 Web Network, LLC
The information contained on this website is intended as an educational aid only and is not intended as medical and/or legal advice.