How Much Does a Surety Bond Cost

Surety bonds provide financial protection for businesses, project owners, and many others, making it essential for all parties involved. But how much is a surety bond? The cost of a bond typically ranges from 1% to 10% of the bond amount, but what you’ll pay depends on several factors, such as bond type, industry risk, and your credit score. In some cases, bonds are offered at fixed prices. 

If you’re considering getting a surety bond, it’s important to know how the premium is calculated to ensure you get the best price possible. In this blog, we’ll cover everything you need to know about the factors that influence the rate of surety bonds. This way, you can estimate the bond's premium rate, make a knowledgeable decision, and choose the right policy for you.

What are the factors that affect the cost of a surety bond?

So how much is a surety bond? Underwriters will evaluate different factors when processing your bond application. Ultimately, your premium (bond cost) depends on creditworthiness, bond type, financial statements, assets, and experience in the industry. We’ll cover each of these in detail below.

Graphic #1: Diagram summarizing factors that affect surety bond costs

Credit score (Most Important)

When it comes to determining the cost of a bond, your credit score is one of the most critical factors surety companies will look at. This is because sureties will use it to understand your financial risk and how likely you are to default. Those with high credit ratings often demonstrate financial stability and are considered trustworthy.

But how exactly does a credit score affect the cost of your bond? Typically, the lower the credit score, the higher the bond price due to the increased risk. Individuals with good to excellent credit scores (>680) can expect premier rates ranging between .5% to 3%. On the other hand, those with poor credit (<580) may pay 4% to 15% of the bond amount.

As an example, say you have a score of 620 and are applying for an auto dealer bond. You can expect your rate to fall within 2.5% to 5%, resulting in a premium of $25 to $50 for a $1,000 bond. 

However, don’t worry if you have a less-than-perfect credit score. There are various surety agencies with specialized programs, so you can get a policy that meets your coverage and financial requirements. In most cases, the quoted rate will be higher than average, but there are financing plans available that allow you to pay your premium over time. 

A “bad” credit score doesn't mean the end of your entrepreneurial dreams. Here are some tips to help improve your credit rating: 

  • Avoid late payments: Paying your bills on time is essential since missed payments can cause your credit score to drop. If you have past-due balances, pay them off as soon as possible. 
  • Check your credit report for errors: An error in your credit report may be the culprit behind your low score. Removing any inaccuracies can give your score a boost. 
  • Keep your credit utilization ratio to 30% or less: A high utilization rate can negatively affect your score, so it’s best to keep it under 30%. You can ask your credit card company to increase your credit limit and continue to pay off revolving debts. 
  • Maintain old accounts open: Your credit history has a significant impact on your score, so it’s a good idea to keep accounts open and use them to make small recurring payments.

Type of bond

Another factor that impacts your premium is the type of bond you need. Certain kinds of bonds are inherently risky, so you can anticipate paying more. 

For example, freight broker bonds have rates of 1% to 15%, making them one of the most expensive surety bonds due to the mandated coverage amount. The Federal Motor Carrier Safety Administration (FMCSA) requires all freight brokers to have a $75,000 bond policy. Additionally, freight brokers are essential to the supply chain. Obtaining a surety bond minimizes the risk of economic setbacks by preventing these entities from going out of business due to claims made against them. 

In contrast, you can expect to pay a lower premium for bonds with less risk. Low-risk surety bonds include commercial bonds like auto dealer and sales tax bonds. The rates for auto dealer bonds range from .5% to 10%. 

Bonds required by state and federal governments will also be more costly since it’s mandatory to have higher bond amounts. In many cases, you’ll pay more for bonds with additional coverage.

Financial statements

Underwriters will review financial documents like balance sheets and income statements to determine your ability to pay the bond premium and repay the company if a claim is made. In some cases, providing the surety company with your financial statements is non-negotiable and a requirement. 

Submitting financial documentation can allow you to receive a better quote, especially if you have good or excellent credit and no negative marks. This is because surety underwriters will be more confident in your ability to pay for the premium and bond if there’s a claim.


Similarly, assets can also help you obtain a lower cost on your bond. Assets are reviewed to verify your financial health and demonstrate you can pay claims and other costs associated with the bond. Examples of assets include real estate, inventory, furniture, bonded titles, cash, and accounts receivable. 

Experience in industry 

How much experience you have within a specific industry can impact the cost of your surety bond. More experienced applicants are considered less risky since they'll likely make fewer mistakes and fulfill their professional duties. Additionally, applicants with minimal industry experience may not have a consistent cash flow to pay for the bond and may be inclined to quit a project early.

Underwriters will look at various business documents, such as balance sheets and work-in-progress forms, to evaluate whether or not the company can afford the bond.

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Cost by bond type

As mentioned, the cost of your bond is influenced by the type you get. We’ll go over a few of the most common categories of surety bonds and the typical costs associated with them below.

Type of Bond Average Bond Rates
License bonds 1% to 10%
Construction bonds 1% to 3%
Fidelity bonds 1% to 3%
Court bonds 1% to 15%


License bonds

A license bond (also known as a license and permit bond) is a kind of commercial bond often required by local, state, and federal institutions. Getting a license bond guarantees your business remains compliant with laws and regulations set by government entities. It’s also required to perform certain jobs, including roofing, general contracting, and plumbing.

License bonds usually cost between 1% to 10% of the bond amount, which varies depending on your city and state requirements and license type. If your bond amount is $5,000 and the rate is 5%, your cost would be $250. However, the price of a license bond ultimately depends on the type of bond you’re required to obtain, the bond amount, financial health, work experience, and operational/market risks. 

Construction bonds

Construction bonds are used to ensure investors or project owners don’t suffer monetary losses if contractors fail to fulfill their contractual obligations. As a result, bills associated with construction projects can be paid despite the project being incomplete. Construction bonds also ensure contractors can pay subcontractors, suppliers, and staff. The government requires this bond and is often submitted by the contractor.  

The cost for construction bonds ranges between 1% to 3% of the bond amount, but it can differ based on the type of services needed, necessary equipment, and creditworthiness. 

Fidelity bonds

Fidelity bonds offer businesses and their customers protection from fraudulent employees, specifically when they have access to their personal information or assets. 

Since this type of bond is considered low risk, the cost can range between 1% to 3% of the bond amount. In most cases, companies pay an average of $100 annually for a $5,000 bond, but it can vary. Factors that affect the cost of fidelity bonds include the bond amount, the number of employees handling sensitive information, the data managed, and the type of bond you need. 

Court bonds

Court bonds (also known as judicial bonds) are used in legal proceedings to ensure any duties ordered by the court are fulfilled and guarantee compliance from all parties involved. There are various types of court bonds, including probate, appeal, and injunction bonds, which can affect how much you’ll have to pay.

In addition to the bond type, factors like the bond amount and credit score will influence the cost of your bond. Court bonds typically cost 1% to 15% of the bond’s full coverage amount. In this case, you can anticipate paying $80 to $1,200 for a policy of $8,000. 

Bonds with set pricing

Some surety bonds are offered at fixed prices, meaning you’ll pay a set amount rather than a percentage. Fixed-price bonds are often available because the bond type isn't considered risky. Examples of bonds with set pricing include: 

  • Business Service Bonds
  • Notary bonds
  • Public insurance adjuster bonds 
  • Private investigator bonds
  • ERISA Bonds with bond amount under $500,000

Additionally, your credit score shouldn’t be a determining factor in your approval if you’re obtaining one of the bonds above. However, other elements may affect your eligibility, including your financial history and previous bond claims.

If you’re attempting to get a surety bond with a less-than-ideal credit score, several options are available. By working with the right company, you can find a suitable policy that meets your needs. 

Can surety companies increase the price after a bond is issued?

Generally, no. Your premium for a surety bond is often fixed for the duration of your term based on the conditions agreed upon. However, the cost may increase or decrease at renewal due to changes in your credit score or financial assets, updates to your policy, claims made, and bond amount. If your rate goes up, you’ll pay for a new premium at the start of the new term. 

Typically, your bond is valid for a specific timeframe, meaning it’s enforceable during this period. Underwriters will re-evaluate your bond months before the policy expires, giving you enough time to look for a new surety provider if necessary. To avoid paying more for your bond, work with a qualified surety company to find the most affordable one during the renewal period. 

Wrapping up: Shopping around for the best surety bond rates

The cost for a surety bond can vary from policy to policy due to the various factors underwriters review to determine your rate and premium. One of the most significant factors is your credit score because it demonstrates your ability to pay for the premium and bond should a claim ever be made. Other major elements that affect how much a surety bond costs include the bond type, financial documentation, assets available, and overall experience. 

If you want to get a great price on your next bond, it’s essential to shop around and collect quotes before making a decision. Get your quote from SuretyNow for the most affordable price in the market, any time, any day. If you find a better quote in your search, we’re happy to match it.