Driving School Bonds: When Are They Required?
Most states require that driving schools or driver improvement clinics obtain a surety bond prior to getting licensed.
This surety bond is often referred to as a driving school bond. Its purpose is to provide an extra layer of protection to driving school students, and ensure that driving schools operate their business in accordance with their state’s applicable laws and regulations.
A driving school bond should not be confused with insurance for your business. If a driving school violates the term of the surety bond agreement, they can face a bond claim which will provide compensation to affected third parties.
If you need any assistance with your application, just call us at 866.450.3412 We’re happy to help.
Continue reading for more useful information about driving school bonds.
What’s the cost of driving school bonds?
To calculate your premium, you first need to know your required total amount. The best way to do this is by contacting the relevant authority in your state. Here’s a list of total amounts by state that you can use as reference. Keep in mind that bonding requirements are often subject to change.
- Connecticut: $1,000
- Ohio: $2,000
- Kansas and Colorado: $2,500
- Nebraska: $3,000
- Virginia and New Mexico: $5,000
- Tennessee: $7,500
- California, Georgia, Illinois, Massachusetts, Minnesota, Nevada, New Jersey, South Carolina, Texas, Wisconsin: $10,000
- Connecticut: $15,000
- Michigan and Minnesota: $20,000
- North Carolina: $30,000
- Florida and Iowa: $50,000
The amounts displayed are your maximum liability under the bond agreement. For example, if you trigger a claim in California, you can be liable for up to $10,000.
To calculate your premium, you can use the surety bond cost calculator on the right. You will need to know your personal credit score, as this is the most important factor considered during the underwriting process.
Applicants with good credit scores are usually quoted premiums of 1%- 3% a year, while those with lower scores can be quoted up to 10%.
Depending on your specific situation, and the type of bond you require, you might be asked to provide supporting documentation which can further influence your cost. For example, strong financial statements, or a business with years of experience can be offered a lower premium, since these are all signals that they pose a lower risk of triggering a claim.
Getting Bonded with Bad Credit
If you have a low credit score, your driving school can most likely still get bonded. Surety bonds companies assume certain risks when underwriting each bond, so a lower score will probably mean that you need to pay a higher price for your bond. However, in most cases you will still be able to get bonded without any issues.
Bryant Surety Bonds has partnerships with over 20 A-rated and T-listed bonding companies, the highest sign of trustworthiness in the industry. This means we can compare many rates and match you with the bonding company offering the lowest quote for your situation.
To find out more about getting bonded with bad credit, check out our Bad Credit Program.
Get a Free Quote Today!
Wondering exactly how much you will have to pay for your bond? It’s easy to find out. Submit our one-page online application and we will be in touch with you shortly. One of our agents will give you a personal no-obligations quote.
If you choose to work with us there are a number of additional benefits. We offer very fast turnaround (around one to two business days in most cases) and we will make sure that you stay compliant with the bonding requirement when its renewal is due.
Got any questions regarding your driving school bond application? Simply call us at 866.450.3412 and let us know how we can help.
Staying out of claims
The regulatory authority in each state will have specific guidelines for driving schools. This means you need to be aware of these guidelines, and know the provisions of the laws that are relevant to your business.
If you engage in unlawful business practices such as fraud or misrepresentation, and a third party suffers damages or loss as a result, this can lead to a claim against you. In case of a claim, each state will have a procedure on handling claims. Usually, you are given a certain period of time to make good on the claim. If you fail to do so, the surety is legally obliged to step in and provide the compensation. It’s the responsibility of the bonded party to reimburse the surety eventually.
If you believe the claim against you is groundless, you need to prepare supporting documentation. As a rule of thumb, you should document your dispute with the claimant so you can build a strong case in court. In some cases, the surety can help with legal assistance too.