Surety Bond Pricing Guide for Contractors

As a contractor, you know that securing a surety bond can be a crucial step in landing a project, but have you ever wondered how much it's going to cost you? The good news is that surety bond pricing can vary depending on several factors, such as your credit score, business experience, and the type of project you're bidding on.

A good credit score can save you money on surety bond premiums. If you have a credit score above 700, you may qualify for a lower premium rate.

The type of project you're bidding on also plays a significant role in determining the cost of a surety bond. For example, a construction project that requires a higher level of expertise and risk may have a higher premium rate than a smaller, less complex project.

The premium rate for a surety bond is typically a percentage of the bond amount. For example, if you need a $100,000 bond and the premium rate is 1%, you'll pay $1,000 in premiums.

The price of a surety bond is determined by several key factors, and it's essential to understand how these factors impact your premium.

Your bond amount is a significant factor in determining your premium, as higher coverage bonds typically have higher premiums.

A strong credit score is also crucial, as it qualifies you for the best pricing.

Asset ownership indicates lower financial risk, which can lower your premium.

Positive financial statements can also lower your quote, making it more affordable.

Industry experience lowers risk for certain bonds, which can result in lower premiums.

Here are the six factors that impact your surety bond price:

Your state of residence can also affect your bond price, as each state has different bonding requirements. For instance, auto dealers in Arizona must file a $100,000 surety bond, while dealers in South Dakota only need a $25,000 bond.

The contractor directly pays for a performance bond, which is normally included in the bid price. This means the owner of the project indirectly pays for the bond through the bid prices of all contractors.

The cost of the bond is based on the contract amount, and can vary depending on the contractor's financial history, credit score, and the owner's financial history and credit score. A contractor with poor credit can expect a higher bond cost.

The bond premium is a percentage of the bond amount, typically ranging from 3% to 5% or more, depending on the job's risk level. For example, a $5,000 bond might cost between $25 and $500.

The contractor directly pays for a performance bond, and they normally include the cost in their bid price. This means the owner of the project, the Obligee, pays for the bond indirectly.

The contractor absorbs the cost of the bond, which is then passed on to the Obligee through the bid process.

Your Provider is crucial when it comes to getting the best rate on your surety bond.

You'll want to work with a bonding provider who can offer competitive rates, as surety bond rates vary.

A good bonding provider will consider your contractor's financial history and credit score, as well as the owner's, to determine the bond cost.

The cost of the bond is based on the amount of the contract, with the rates varying depending on the type of job.

Certain jobs are deemed riskier, which increases the premium, so it's essential to choose a provider who understands the nuances of your project.

Now that you know the cost of your bond, it's time to take the next step. Simply pay for your premium through our secure online checkout or over the phone.

Your premium is a much smaller fee you pay the surety company to issue the bond, as a percentage of the bond amount. For example, if you need a $5,000 bond, you'll likely only pay a premium of $25–$500.

Once you've paid your premium, we'll deliver your official bond documentation with an unparalleled turnaround time. This typically happens quickly, so you can get back to business as usual.

Your bond amount is not the cost of your bond, but rather the total security for any potential claims made against the bond. So, don't worry if your bond amount is high, your premium will still be relatively low.

The cost of a surety bond is determined by several factors, including the contractor's financial history and credit score. A good credit score can lower the bond cost, while poor credit can increase it.

The contractor's financial history, including their credit score, is a major factor in determining the bond cost. A contractor with poor credit may see their bond cost increase from 3% to 4-5%.

The type of job also affects the bond cost, with riskier jobs increasing the premium. Certain jobs are deemed riskier, such as general construction, and may increase the bond cost.

The contract price is also a factor in determining the bond cost. The bond penalty is usually 100% of the contract price for both performance and payment bonds.

Time surcharge is applied when the contract duration is expected to exceed one or two years, depending on the rate filing. Some rate filings do not charge for the second year of exposure.

Here are the factors that can affect the surety bond rate, grouped into categories:

Financial Factors

Risk Factors

Other Factors

The surety bond rate is calculated based on a number of risk factors. To get an accurate bond premium, the surety needs to know how risky it is to issue your bond.

They evaluate several key risk areas, including your credit history and financial situation. This will give them a better understanding of your likelihood of defaulting on the bond.

The bond rate will be higher if you have bad credit, but there are programs available that can help, such as the Bad Credit Surety Bonding Program.

Most surety companies have to file their rates and terms with each state Insurance Commissioner’s Office and must adhere to those filings. This means that surety rates and premiums are regulated and approved by the state.

Surety rates and premiums are a fee paid to the Surety for the underwriting and prequalifying the Principal. The cost for a single contract's performance and payment bond is one fee; there usually is not a separate fee for each bond.

Your credit score plays a significant role in determining your surety bond rate. The surety bond rate is calculated based on risk factors, and one of those factors is your creditworthiness.

If you have bad credit, you may still be eligible for a surety bond. Learn more about our Bad Credit Surety Bonding Program.

The surety needs to know how risky it is to issue your bond, and your credit score is a key indicator of that risk.

Lowering your surety bond price requires some effort, but it's worth it to save money. You can start by choosing the right type of bond, such as an Instant Issue Bond, which is issued instantly at a set price.

Instant Issue Bonds are a great option for those who want a straightforward and affordable bond. Underwritten Bonds, on the other hand, are subject to underwriting review and can have varying prices.

To get the lowest pricing for your surety bond, your credit score, personal financials, and business financials should be in good shape. A good credit score can make a big difference, with Excellent Credit (675+) resulting in lower premiums.

Here are some tips to strengthen your application and lower your premium quote:

By following these tips and choosing the right type of bond, you can lower your surety bond price and save money.