What is a surety bond?

A surety bond is a legally binding agreement between three parties: a principal, an obligee, and a surety company.

  • Principal: the individual or business owner that needs the bond
  • Obligee: the entity that requires the bond
  • Surety company: the one responsible for issuing the bond

Surety bonds provide a financial guarantee to different parties including governments, consumers, businesses, and creditors. If the principal violates the conditions agreed to in the bond, damaged parties can file a claim against the bond. The surety company pays the damaged parties and the principal is responsible for reimbursing the surety company.

What is the difference between surety bond cost and surety bond amount?

The surety bond amount is the total value of the bond and represents the maximum amount the surety company agrees to pay if there is a claim against the bond.

The bond amount is usually determined by the obligee. It is often the same amount for everyone that requires the bond. For other bonds, the amount can vary based on certain factors. For example, with some motor vehicle dealer bonds, the required amount will vary depending on the number of vehicles the dealer sells during the year.

The surety bond cost is the amount the principal must pay to obtain the bond. This cost is typically a small percentage of the total bond amount and is known as the premium.

Premiums for most bonds are determined on an individual basis. Other bonds have a fixed bond amount and a fixed premium for all bondholders.

How is the surety bond cost calculated?

For bonds that do not have a fixed price, there are a variety of factors that can impact your bond rate. Here are some of the factors the surety company can evaluate when underwriting your surety bond premium:

Credit history

The surety company undertakes a risk when they issue a new surety bond. If a claim is filed against the bond, they want to be confident that the bondholder will reimburse them for the damages they pay out. Because of this, surety companies review your credit history to see if you have a history of paying obligations on time.

A low credit score is a negative sign for the surety company and it often leads to higher bond premiums as you are perceived as a higher risk. Fortunately, there are always steps you can take to improve a bad credit score.

Industry experience

For surety bonds that are required as part of the process for obtaining a license or permit, the surety company will review the applicant’s industry experience.

People with more experience are seen as lower risk. This is because they have developed the skills and knowledge needed to work while avoiding claims on the bond.

Financial statements

For certain bonds, the surety company may ask to see your financial statements including your balance sheet, income statement, tax returns, and bank statements.

Naturally, a person with more financial assets is seen as a lower risk because the surety company can verify that the applicant has the means to pay them back should a claim be made against the bond.

Bond type

Different types of surety bonds have different levels of risk. Riskier bonds are those that have a higher probability of a claim being made against them. For example, construction bonds traditionally result in more claims than less risky bonds such as notary bonds.

To compensate for the increased likelihood of claims being made against the bond, surety companies will charge higher premiums on more risky bonds.


For certain types of surety bonds, the exact requirements vary based on the state, city, or local municipality requiring the bond. Some locations will have higher bonding requirements than others. For instance, the cost of an alcohol bond in Georgia may be different than in Florida.

Costs for different types of surety bonds

Below are the typical cost ranges for some popular types of bonds:

Can you get a surety bond with bad credit?

Yes, you can get a surety bond with bad credit. There is a chance you may pay a slightly higher premium than someone with a high credit score. However, EZ Surety offers competitive pricing to individuals of all financial standings.

What bonds don’t require a credit check?

There are certain bonds that have a fixed price regardless of the applicant’s credit history. These generally include:

  • Notary bonds
  • Fidelity bonds (if the bond is below a certain amount)
  • ERISA bonds (for qualified assets and less than $475,000 bond amount)
  • Public insurance adjuster bonds
  • Private investigator bonds

Get a surety bond online with EZ Surety

EZ Surety has extensive experience issuing great rates for all types of surety bonds across the country. Whether you have poor credit or good credit, you can find the bond you need and quickly apply online.

Applying is always free and many bonds are issued instantly online. Browse our site and find your bond to get a free quote or get in touch for more information.