What Factors Affect Surety Bond Costs?

Surety bonds can make up an integral pillar of your business’s risk management and loss control measures. These investments can help mitigate potential losses arising from various scenarios, many of which you may be powerless to prevent. However, while bonds can protect your financial interests, they also may represent a significant line item within your budget. Fortunately, understanding what goes into the cost of a surety bond can help you secure the right products at ideal rates.

Key Factors That Influence Surety Bond Costs

Your surety bond rates may be determined by a multitude of factors. Specifically, the following may be given consideration:

• Credit history—Your personal or business credit score is one of the primary factors surety companies review. Strong credit typically results in lower bond premiums, while lower credit scores may lead to higher costs.
• Bond details—The specific type of surety bond you need, such as a contractor bond, license and permit bond or fidelity bond, can greatly impact rates. Additionally, the required bond’s coverage amount and any specific terms or conditions can determine premiums.
• Business experience and financials—Surety bond providers often look at your business’s track record, industry experience and financial stability. Well-established businesses with solid fiscal records may qualify for better rates.
• Industry—Some industries, types of businesses or specific projects carry higher perceived risk levels than others. For example, large construction contractors may see higher bond premiums than smaller janitorial services.

How Our Team Can Help

At Universal Tax & Multi Services, we work closely with Texas business owners and professionals to identify the right surety bond for their needs. Our team explains the factors that impact your bond cost and helps you navigate the process of finding optimal rates.

Contact us today to discuss your needs and find suitable surety bonds for your business.

This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information.