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Surety Bonds in Texas

Surety Bonds in Texas

Viking Bond Service is here to help your business acquire an affordable surety bond in Texas. Our team boasts many years of experience helping businesses get the surety bond they need when they need it, making us one of the premier bonding companies in the area. Surety bonds in Texas are often required by state regulations and we offer bonding services for many of the state-required surety bonds including commercial and contract bonds.

What is a Surety Bond In Texas?

There are all different surety bonds types, but each works in the same way. When someone obtains a surety bond, they agree to accept financial liability for damages caused to another party. These can include:

  • State agencies
  • Project owners
  • Utility companies
  • Consumers

When unlawful, unethical, or contractually prohibited misconduct results in damages, the negatively affected party may file a claim against the surety bond. The surety agency that backs the bond guarantees a settlement payment for any valid claims.

However, the surety agency does not have the actual liability for the settlement – they just ensure payment. The liability always rests on the shoulders of the person or company that caused the claim in the first place.

Who Are the Parties Involved with a Surety Bond in Texas?

Every surety bond agreement involves three parties entering into a legally-binding commitment:

  • The Principal must obtain the bond and accept liability for claims. The principal has the final financial liability for all claims.
  • The Obligee creates the bond requirements. If the principal fails to follow those requirements, the obligee may file a claim against the bond seeking compensation equal to the damages.
  • The Surety will settle claims with the obligee if the principal can't or won't settle. Even though the surety guarantees payment, they will expect repayment – plus interest and fees – from the principal.

Who Needs a Surety Bond in Texas?

Many people throughout the Lonestar state need surety bonds. Some may only need them once, while others will need one occasionally or even regularly. That list includes many businesses and professionals who must obtain surety bonds as part of the mandatory licensure process.

Contractors and construction companies also face heavy bonding requirements, because individual jobs they work can often require multiple bonds. Private individuals may also need surety bonds, whether as part of court proceedings or to build trust with another party. Anyone who needs a Texas surety bond should get one without delay. Contact Viking Bond Service to get a quote for most bonds within 24 hours.

Why Do Texas Surety Bond Requirements Exist?

The reason so many people have to comply with Texas surety bond requirements is simple: surety bonds offer reliable financial protection for individuals and businesses. They work to discourage illegal or undesirable behavior by holding someone financially liable for any damages that result. Knowing that committing crimes or cutting corners has consequences is a powerful motivator to do things correctly.

At the same time, surety bonds work to streamline the restitution process for a person or business harmed by someone covered by a surety bond. Without the surety bond to protect a party's interest and move processes along, there wouldn't be an easy or effective mechanism to police contracts to ensure victims can financially recover from potential losses. Since surety bonds work so well at managing risk, establishing trust, and ensuring accountability, they are widespread throughout Texas.

It should also be pointed out that surety bonds benefit the principal as well, even though that person has to pay for the bond and pay for claims. Surety bonds establish trust between unfamiliar parties, which helps to facilitate business and other relationships. People, professionals, and businesses with a surety bond gain legitimacy by having a bond because they demonstrate their willingness to abide by the law and act ethically – or else face consequences under the bond agreement. In practice, Texas surety bonds benefit both the principal and the obligee.

How to Get a Surety Bond in Texas

To obtain a surety bond in Texas you'll need to apply for the required bond through a bonding company like Viking Bond Service. The application process can vary by bond type but the first step is to complete an application. Most commercial license and permit bonds can be applied for using our simple online surety bond application.

Contract performance bonds however require a more detailed application that one of our agents will provide. You'll also need to submit supporting documentation with your application so that the bonding company can underwrite and quote the bond request. Viking Bond Service aims to provide applicants with a quote the same day the application is received.

The Cost of Texas Surety Bonds

The cost of surety bonds in Texas is determined by many factors including the type of bond, the bond amount, and the applicant's credit history. The supporting documentation submitted with your application, which often includes, experience, your credit score, and business financials will be used to help the surety identify the risk level of your bond.

This means they'll calculate the likelihood of your bond being claimed against. Individuals and businesses with strong credit and financial history will pay a lower premium for bonds than people with weaker credit. Viking Bond Service specializes in helping all Texas business owners, even those with poor credit, acquire an affordable bond.

Common Texas Surety Bonds

There are many types of bonds in the state of Texas. Viking Bond Service specializes in all of these. They are categorized in several types, the two main types being contract and commercial bonds.

  • Commercial bonds are also known as license and permit bonds. They are often needed as part of the licensing process and are required by state regulations. Common license bonds include liquor bonds and auto dealer bonds.
  • Contract bonds guarantee that contracts are fulfilled and are frequently used in the construction industry. Common contract surety bonds in Texas include bid bonds, performance bonds, and maintenance bonds. They provide financial protection for the parties involved in a contract and can work as a guarantee that work will be paid for and completed to specifications.
  • Court Bonds are required by a judge as part of some civil and criminal trials. Examples include receivership bonds or replevin bonds. All court bonds hold the principal responsible for following the judgment of the court.
  • Fidelity Bonds will compensate a business or its customers for damages caused by rogue employees. These bonds are not mandatory. Businesses choose to obtain them as protection against a common risk. Examples include janitorial services bonds (for cleaning companies) and business services bonds (for general businesses).

Do You Need to Renew Surety Bonds in Texas?

Some bonds, most commonly commercial bonds, require renewal. Since these bonds are a requirement of getting and keeping a professional or business license, a principal needs an active bond for as long as they have an active license. Term limits for bond coverage are usually 12 months, but longer and shorter terms are possible. Renewal will involve undergoing a credit check which underwriters will use to adjust premium prices up or down based on credit changes. For any Texas surety bond that requires renewal, stay aware of the expiration date (the surety will provide reminders) and budget for the renewal premium.

Texas Surety Bonds by Viking Bond Service

Whether you're looking for a contract or commercial surety bond, the Viking Bond Service team is here to help with all of your Texas surety bond needs. It takes less time, money, and hassle than you expect to meet Texas surety bond requirements. Explore the cost of any kind of bond you need by requesting a quote. Explore the details of any kind of bond you need by contacting us or call 1-888-2-SURETY (1-888-278-7389). Choose Viking Bond Service today!

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More About Surety Bonds:
How to get a Surety Bond

Need a Bond? Here's how to get one. Read here for information about the bonding process.

How are Performance Bond premiums figured?

Many variables go into figuring Performance Bond premiums. Read about what variables are considered and why premiums can vary so widely.

Quotes available with bad credit

You may still be able to get approved despite challenged credit.

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