Warehouse Bonds

Warehouse bonds, also known as warehouseman bonds, are necessary to safeguard goods stored within storage facilities or warehouses. These bonds serve as a safety net, ensuring that clients and customers are compensated for losses resulting from various factors such as theft, fire, water damage, or damage during handling. 

While warehouse bonds are not uniform across all states, they are crucial in regulating the warehousing and storage business. In numerous states, warehouse bonds are a mandatory regulation set by state authorities. Warehouse owners must obtain these bonds as part of the licensing process to ensure that they adhere to state rules and regulations related to storing and handling goods. Failure to obtain and maintain these bonds can result in legal and operational consequences, including the inability to operate as a warehouse legally.

Quick Overview

Bond Amount: 

  • Varies by state, typically ranging from $5,000 to $10,000 or more


  • Premium rate rates range from 1% to 5% of the bond amount. Applicants with lower credit scores may pay higher rates.
  • Minimum cost: $500 to $1,000 annually.
Example Warehouse Bond (NY)
Example Warehouse Bond (NY)

Warehouse Bond By State

See our table below for information specific to warehouse bonds in each state:

State Bond Amount
Florida $5,000
Georgia based on approved storage capacity (minimum amount $20,000, maximum amount $300,000
Illinois Set by Illinois Commerce Commission; varies
Kansas $5,000- $50,000
Massachusetts $10,000 for every warehouse 
New York $10,000
South Dakota $10,000- $50,000 depending on storage (grain vs. alcohol)
Wisconsin  $10,000- $50,000 depending on storage square footage 



Warehouse Bond FAQs

What is a Warehouse Bond, and what does it cover?

A warehouse bond is a type of surety bond that guarantees that the owner of the stored goods will receive financial compensation if the goods are damaged or stolen. It protects goods stored in a warehouse facility against losses within the boundaries of the bond contract. It covers losses, including theft, fire, water damage, insufficient maintenance, poor handling of goods, etc. However, it is essential to read the bond agreement, as coverage may have specific limitations, and “Acts of God” are often excluded. 

Acts of Gods are events resulting directly from natural disasters that could not have been protected, such as floods, hurricanes, tornados, and earthquakes. Warehouse bonds often do not cover losses related to these acts.

Coverage for events excluded from standard warehouse bonds, such as natural disasters, can often be obtained through separate insurance policies or specialized bonds. These additional forms of protection can cover a broader range of risks.

How do Warehouse Bonds Work?

Warehouse owners are required to obtain warehouse bonds as a safety regulation. They work as a three-party contract involving the warehouse owner (the principal), the state governing authority (the obligee), and the surety bond company (the surety). It ensures warehouse operators comply with state laws and regulations regarding storing and handling goods. Failure to meet these obligations may result in a claim being filed against the bond.

Requirements for warehouse bonds vary state by state. In some states, the warehouse must have a bond to operate legally. 

What factors affect the cost of a Warehouse Bond?

The primary factors that influence the cost of a warehouse bond are the bond amount required by your state, your personal credit history, the size and contents of your warehouse, and its location. For example, in South Dakota, there are different bond amounts for warehouses that store grain than for those that store alcohol. In Wisconsin, square footage matters in determining the bond amount. The bond amounts are determined by the regulatory agency in your state. 

A higher credit score can also lower bond premiums (1% of the bond amount). Getting a warehouse bond with bad credit is possible. Bonds are available to warehouse owners with low credit scores, albeit at higher rates. The specific terms and costs will depend on the surety and your unique circumstances. 

How do I apply for a Warehouse Bond?

To get a warehouse bond, complete an application here. You will be asked to provide information regarding your business and your name, last name, and social security number. Your social security number will be used to check your credit, but it will not harm your credit score. 

During your application, try to provide the most accurate information possible to receive an accurate premium price. It is worth noting that sometimes, the state may send regulators to inspect your warehouse before issuing the bond. 

Once you submit your application, you will receive a quote within 24 hours. Then, you may submit the bond and power of attorney to the regulatory agency of your state that requires the bond. 

Can I operate my warehouse without a Bond?

It depends on whether your state requires a bond to operate a warehouse. If your state does not have a requirement, you can operate your warehouse without a bond. Operating a warehouse without a bond is illegal if your state requires one. Owners who continue to operate a warehouse with an expired bond may face penalties, fines, business shut-downs for non-compliance with regulations, or license revocation. 

How does a claim on a Warehouse Bond work?

If a party experiences damages due to the warehouse operator’s failure to meet their obligations, they can file a claim on the bond. If the claim is approved, the surety company that provided the bond will compensate the claimant up to the bond’s total amount. For example, if your bond amount was $10,000, and there were $11,000 in losses, the surety company will compensate the claimant $10,000. The warehouse operator is then responsible for repaying the surety for the amount paid, as well as the losses that the bond could not cover. 

Can I get a Warehouse Bond for specialized warehouses? 

Yes. Warehouse bonds can be tailored to specific types of warehouses. Some states already have set prices for warehouses that store different types of goods. The bond terms, amounts, and requirements will vary depending on the type of warehouse you operate, so be sure to include these details in the application for your surety bond provider.