When should I renew my surety bond?
A surety bond is a contract between a contractor and a third-party backer. Because the performance of construction activities requires risk-taking by all parties, both your company and the other party want to protect themselves from any problems that might happen during or after construction.
By signing this agreement, an insurance company will help ensure that you do not have financial trouble if something goes wrong. In exchange for the promise of funds from an insurance company, you agree to follow specific rules set out in the contract.
In general, you should renew your bond just before it expires so that you can continue working with minimal interruption. However, many businesses tend to renew their plans without considering other factors first.
Do you get your money back from a surety bond?
The short answer is yes! A surety company will cancel your bond once you have paid all of your outstanding financial obligations under it. You are not entitled to any interest or other compensation for the time after the cancellation that they hold onto your money, however. This policy exists because it allows honest businesses to enter into business arrangements with bonded entities without fear their principals will default.
The surety company can also make you pay for canceling your bond early, even though it is their responsibility to cancel the bond once you fulfill your obligations. It is important to speak with a representative of your surety company and understand what fees and penalties might apply if you want to terminate the bond.
Many times they will waive these fees as a sign of goodwill and retain accounts, so this is an issue that should be negotiated upfront rather than imposed later on in the process. There may be some circumstances where it makes sense for them not to negotiate these terms, however, such as if they consider you a high risk or if they cannot find another principal at that time who would accept those conditions.
In order to get information on the specific policies at a surety company, you should speak with their underwriting department. Many times they will not offer this information over the phone, but you can request it in writing and they will respond within 10 business days.
Do surety bonds expire?
Surety bonds are issued by an agency that has several agents spread out across the country. It may be quite difficult for an individual to track down this agency if he does not have any contact information.
However, in most cases, the issuing company will send annual certificates that provide necessary updates on the status of their clients’ surety bonds. This certificate must be checked carefully before you sign it because it contains all information regarding your bond including its expiration date.
If you want to extend the period of your bond, you have to contact the agency directly or their website. If you choose to contact them via e-mail or telephone, they will give you all instructions on what steps have to be taken. The agency may ask for additional information which might include providing a copy of your certificate that was just renewed.
Surety bonds usually expire every year but each one has different conditions that affect its expiration date. Therefore, it is important that you know when does yours expire so there won’t be any issues when it’s time for renewal.
What happens when your bond expires?
When your bond expires all the responsibilities that come with being bonded are null and void. This means you’re no longer responsible for fulfilling the stipulations of your contract. You also cannot be arrested or fined for failing to fulfill them in a timely manner.
If you’ve been bonded you should make it a priority to understand exactly what this means because not having a valid bond can have dire consequences. First off, if you’ve broken any laws while under bond it will be considered a parole violation and can add time onto your sentence. In addition to this, there’s also the chance that anyone who’s bonded you can sue your bond for damages.
What does it mean to renew a surety bond?
Renewing your surety bond means you are extending the contract for one or more additional years. You can do this by contacting the issuer of your current surety bond and asking them to extend the term on your existing bond. Most companies will require that their policyholder contact them 90 days before the expiration date of their original agreement, but policies vary greatly, so be sure to check with them before assuming anything.
The price may stay the same or increase based on many factors including, but not limited to, company fees, overall risk level associated with you as an individual or entity, and regulatory changes in your jurisdiction. Be aware there may be penalties for failing to notify the issuer of a bond renewal before the current policy expires, so it is recommended you confirm with them what their requirements are.