Surety Bond Rates Explained

Surety Bond Rates Explained

When it comes to buying a surety bond one of the first questions applicants ask is, “how much will the bond cost?” Surety bonds come in many types, many sizes…and many prices, ranging from as little as $100 to thousands of dollars. So, what determines the cost of a surety bond? Well, a number of factors.

Surety Bond Rates – Evaluating Your Application

The most important aspect to understand when applying for a surety bond is that the surety bond rate is calculated based on a number of risk factors. To accurately calculate your bond premium, the surety needs to know how risky it is to issue your bond, and to do this they evaluate several key risk areas:

The Type of Bond

Different bonds have different levels of risk so one of the key factors that determine your surety bond rate will be the type of surety bond you’re applying for. When it comes to bond premiums, higher risk bonds cost more than lower risk bonds. Why? Because surety bonds provide financial guarantees for your future work and other business activities, so before issuing a bond, the surety must assess the riskiness of their guarantee. Higher risk = higher cost.


How do sureties determine the risk level of a surety bond? There are a few factors to this one, too. To start, they’ll assess the likelihood that a claim will be made against the bond; certain bond types, like mortgage broker bonds, historically have more claims made against them, making them higher risk than other bonds, such as notary bonds. Bonds that are statistically proven to have claims made against them more often are generally more expensive as they carry a higher level of risk.

The Applicant’s Risk Level

When it comes to surety bonds, the bond applicant is also considered as much of a risk factor as the type of bond. When a surety underwrites a bond they will assess the risk of individual applicants in order to determine their surety bond rate. Personal credit is often the most important factor in assessing your risk level, and thus, your bond rate. Although your credit history can seem irrelevant when it comes to a surety bond, it actually makes total sense when you look at it as a way of assessing your behavior. Your credit history can give the surety an insight into how well you’ve handled your finances in the past and how you’re currently managing your money. If you have a history of risky behavior with money, this will be a warning sign to the surety that you pose a higher risk.


Those with excellent credit can often secure a surety bond with a low percentage (often between 0.5% and 5%) of the total bond amount. For those with poor credit, it can be harder to secure a bond, with surety bond rates climbing to a range of 5% to 20% of the total bond amount.


For certain surety bonds, such as construction bonds, the surety will likely also consider an applicant’s business and work history, as well as business financials, before making a decision on bond pricing.

Other Factors That Affect Surety Bond Rates

In addition to risk, the surety bond rate will also be impacted by a number of other factors:

The Bond Amount

Surety bond premiums (the amount you pay) are often calculated as a percentage of the total bond amount, usually between 0.5% and 5% of the bond amount for applicants with good credit, and between 5% up to as much as 20% of the bond amount for applicants with poor credit.


The bond amount can be determined in a number of ways such as the amount required by the state or the cost of a contract that needs bonding. The value of the bond relative to the item or work being guaranteed can also vary. For example, lost instrument bonds are often required to be bonded for one and a half to two times the amount of the lost instrument being protected, while construction bonds are generally only written up to the value of the work being performed.


The bond amount is a critical factor in determining the price. A $10,000 construction performance bond with a premium of 1%, for example, will cost $100. Meanwhile, a $100,000 construction performance bond, with a 1% rate, will cost $1,000, which is ten times the cost of the smaller bond. As mentioned above, if your application is deemed as a higher risk you could be charged a higher percentage. For example, your surety bond rate may be 5% of the bond amount, which works out at $5,000 for a $100,000 bond.


The surety bond rate for the bond type and the percentage of the amount that you pay as a premium are the two key data points when determining your bond rate, and both are based on how risky the bond is.

The Applicant’s Location

For many types of surety bonds, such as liquor license bonds, the requirements vary from state to state, and even in some cases, by city or municipality. Some states have higher bonding amount requirements than others. For example, the cost for a liquor license bond in California may be different than the cost of a liquor license bond in Arizona.

Your Bonding Provider

Surety bond rates vary, and working with the right bonding provider is important to get the best rate on the bond you need. There can also be other factors that affect your surety bond rate, such as base premium rates, or agent and/or broker fees.

Get a Great Rate on Your Surety Bond

Viking Bond Service is licensed nationwide to provide surety bonds of all sizes and types and can help both clients with good credit, as well as those with bad credit secure an affordable surety bond.


With many years of experience helping businesses secure surety bonds, we’ve created a quick and easy application process to help you get the right bond at the best price. We provide bonding quotes quickly, often on the same day. Get in touch with us, by calling 1-888-278-7389, or by completing the application on our website, and our friendly and knowledgeable team of surety bond professionals will assist you with your bonding needs.