At Viking Bond Service one of the questions we’re most commonly asked is, “do surety bonds expire?” The simple answer is yes, but most types of bonds need to be renewed to run for another term (the coverage period of a bond). Bonds generally run year to year.
Surety bond terms
The majority of surety bonds last for a set period known as a surety bond term, once the term period is reached the surety bond must be renewed/extended or the bond will expire. The length of a surety bond is defined when the surety bond is acquired. Bonds may last for multiple years if the premium is paid up front for those multiple years.
Are all bonds renewable?
Whether on not you can renew an existing bond when it is due to expire depends on a number of factors, which include the type of bond and whether the obligee (the entity requiring the bond) requires renewal. If the bond isn’t renewable you will need to obtain a replacement/renewal bond from the carrier. Some bonds cannot be canceled but must rather be released by the obligee. However in these cases, premium remains due on a yearly basis until the release is obtained.
Is it easy to renew a bond?
The process of renewing a surety bond is a simple process. The surety bonding company will again analyze the risk that the surety bond poses in order to calculate the bond premium. Key areas used to assess the likelihood of the bond being claimed against include business financial records, business experience, type of bond, and the principal’s (person taking out the bond) credit history. Once the bond premium is set the principal is required to pay the new premium to extend the term of the bond. The surety will then keep the bond in force. They will also make the obligee aware that the bond has been renewed in most cases by way of a Continuation Certificate. Some bonds are simply considered “Continuous Until Cancelled”. It’s important to note that to renew a bond the principal must respond to the Renewal Notice and pay the new premium before the original surety bond term expires. If the principal fails to complete this process before the bond term ends they may be required to apply for a new bond or obtain a Reinstatement.
Use Viking Bond Service for all your surety bond needs
Viking Bond Service is a leading supplier of surety bonds in the United States. We offer a fast, efficient, and affordable bonding services to help your business acquire the surety bond they need. Contact our team today to apply for a bond.