Renewing your Surety Bond Part 2
Welcome back! Here’s a 3-part guide highlighting the process of renewing a surety bond as well as
answering some of the most commonly asked questions about surety bond renewals.
Find out the necessary information that you need before renewing a bond.
This second part of the series will explain the step-by-step
process of renewing a surety bond and determining the cost of renewing a bond.
Previously, we’ve discussed the 4 types of bond terms and determined
whether a bond should be renewed or should be extended.
Once you’ve determined that you should
renew your bond, you should then know how much your surety bond renewal would cost.
Afterward, you could follow the listed steps to easily renew your surety bond.
DETERMINE HOW MUCH YOUR SURETY BOND RENEWAL WILL COST.
The AMOUNT YOU PAID for the original bond will usually remain the same when you renew it.
Depending on a variety of factors, the amount may increase or decrease in some cases.
The amount that will be paid to the Surety, also known as the Principal’s bond premium,
can be as little as 1% of the bond amount. The bond premium that a Principal must pay
is largely determined by the Obligee's set bond amount, which is mostly based on relevant law.
Some of the other changes that may affect your surety bond cost upon renewal are the following:
1. A new law stating an increase in the bond amount
2. The Obligee requires a change in the bond amount
3. The Principal breached the bonded contract which leads to an increase in the bond amount
4. The Principal performed all his or her contractual
obligations well leading to a decrease in the bond amount
5. The Principal’s financial capacity has changed 6. Changes in the Principal’s credit score
Here is the step-by-step process of renewing a surety bond:
1) Let your Surety know that you’ll be renewing your bond
- You must inform your Surety as soon as you have received a renewal notification.
IF YOU ARE MOVING TO A NEW SURETY, your previous Surety must issue a notice of cancellation first.
2) Submit the necessary requirements - The Surety underwriter may still
require you to submit certain requirements especially if there are changes to the bond.
The underwriter will then assess the information you’ve submitted. Some of the information that you
may be required to submit are the following: ● Credit score
● Job or business history ● Financial history
3) Sign the Indemnity Agreement - A new Indemnity Agreement will be
executed if there are any changes to your bond. If there are none, you don’t need to sign a new one.
4) Pay the bond premium 5) Receive your surety bond
Easy right? So what should you do after your surety bond has been renewed?
Firstly, you have to go over all of the information on your renewed bond.
Even if you have faith in your Surety, it is always a good idea to double-check any document
to ensure that everything is correct. Inform your Surety immediately if there are incorrect entries.
Afterward, you may submit the bond to the Obligee.
That’s the end of Part 2 in this 3-part guide to renewing a Surety Bond. In the next video,
know the answers to some of the most common questions asked about surety bond renewals.