In September of 2018, the state of Iowa enacted new surety bond requirements for those looking to craft and sell alcohol in the state. This change primarily affects “Class A” and “Special Class A” beer and wine permit holders in the state. If you’re in the craft beer, wine, or liquor business, you may want to familiarize yourself with these new rules. In this post, we’ll take a general look at these changes, so that you can make sure you’re well equipped to follow the alcohol regulations of the state.
Who Do These New Requirements Apply To?
Though these license bonds are commonly known as “brewer’s bonds” they affect fans of other forms of fermentation as well. Along with beer permit holders and brew pub owners, these rules apply to “Class A” wine permit holders and direct wine shippers. In addition, “Class E” liquor control license holders will have to post a bond as well. The requirements vary for each license—we’ll explore the specific requirements later in this post. Whether it’s beer, wine, or liquor you’re crafting or distributing, these bonds can play an important role in the licensing process.
There are three parties involved in any surety bond. First, the obligee is the entity that requires the bond. In this case, it’s the state of Iowa. They require this bond in order to serve the interests of their constituents. Next, the principal is the one who requires surety bond coverage. That’s you, the brewer, in this case. Finally, the surety serves as the underwriter of the brewer’s bond. In the event of a claim against the principal, the surety can step in to help settle it.
Why Does Iowa Require These Bonds?
Brewer’s bonds are used as a way to ensure compliance with rules and regulations relating to creating and selling alcoholic beverages. In the event that a permit holder fails to meet these requirements, a claim can be made against their bond. Having a surety bond in place is a way to guarantee that claimants will be financially compensated in such an event. Though the surety that provides the bond can step in and provide compensation, it’s then the responsibility of the bonded party to reimburse the surety. All in all, these brewers bonds help to give the governing bodies in Iowa peace-of-mind when it comes to their constituents buying and selling alcohol.
What Are the Iowa Brewer’s Bond Requirements?
The new bond requirements are as follows:
- For “Class A” and “Special Class A” (also known as brew pub) beer permit holders, a $10,000 surety bond must be posted.
- For “Class E” liquor control license holders there is a surety bond requirement that ranges between $5,000 and $15,000
- Finally, “Class A” wine permit holders must post a $5,000 bond. Direct wine shippers must meet this requirement as well.
These bond requirements apply to new applications and renewals only. That means that if you’ve already got a surety bond or you were not required to have one when you received your beer, wine, or liquor license, you are omitted from these requirements until you renew.
How Much Do Iowa Brewer’s Bonds Cost?
The cost of a brewer’s bond is a percentage of the bond amount. That means you don’t have to put up the entire bond amount yourself. The bond amount is seen as the maximum amount of compensation that may be disbursed in the event of a dispute. As for determining the price of your bond, there are many factors that go into play. Your credit score, bonding history, and other business factors may all be considered in determining your bond price. Usually, the better your credit score, the lower your bond premium, but there are also options for those with poor credit.
Where Should I Get a Brewer’s Bond?
When it comes to choosing a surety to work with, it’s important to work with one that has experience in the field as well as the staying power to support your bond for the long run. Your passion for fermentation has brought you this far, and the peace-of-mind that a surety bond provides can help you go even further. In the event of a dispute, the surety plays an important role in settling the matters at hand. With all the horror stories out there about fake sureties throwing a wrench in projects around the country, it’s more critical than ever to find a surety you can trust.
Viking Bond Service, Inc. has decades of experience as an industry leader, providing surety bonds of all types. Whether you’re looking to brew beer, build a house, or secure any other type of surety bond, Viking Bond Service, Inc. is your provider of choice. We’re committed to providing a superior surety experience to our clients from all backgrounds by understanding and fulfilling the bond requirements that apply to you and your business. No matter what your goals are as a brewer, Viking Bond Service, Inc. can help you achieve them.