What is a Warehouse Bond?
A warehouse bond is a surety bond required of warehouse owners in some states, to guarantee their compliance with state rules and regulations concerning the storage and handling of goods. For example, you’re required to obtain this bond in New York if you store alcoholic beverages in your warehouse.
The warehouse surety bond’s main function is to protect the businesses or individuals making use of the warehouse to store their commodities and other goods. It guarantees that if the goods are damaged and the owners suffer losses, they may file a claim against the bond.
A warehouse bond is a type of agreement between the parties involved: the warehouse owner (the bond principal), the state and the customers (the bond obligees), and the surety bond company that issues the bond, and provides financial compensation to the obligee in case of a claim.
Compensation may be granted to the obligee when they file a claim against one or more instances of dishonest business practices by the warehouse owner, and/or other violations of state laws and regulations related to their business. If the claim is accepted by the surety, compensation is paid to the obligee up to the full amount of the bond.
The warehouse owner must then repay that amount to the surety, because of the financial backing it has extended to the obligee. In this respect, bonds function like a line of credit, which must be repaid once it has been used. Avoiding claims is therefore the wisest and best way to go.
Read on below for everything you need to know about the cost of warehouse bonds.
Warehouse Bond Cost
How much you need to pay in order to obtain your warehouse bond depends on two main factors: the amount of the bond you are required to post in your state, and your personal finances. Your personal finances– most importantly your personal credit score– determine the percentage of the full bond amount that you need to pay.
Applicants with a high credit score usually need to pay between 0.75% and 2.5% of the total bond amount to acquire their warehouse bond. This is called the “standard market rate.”
Other factors that can influence your bonding rate include: your financial statements, your industry record, and also your choice of surety bond agency. You can learn more about them in our surety bond cost guide.
By getting your bond with Bryant Surety Bonds, you are guaranteed to have it issued by one of the best sureties in the nation. All of our partners are A-rated and T-listed companies, which means they are accepted nationwide as being the most reliable sureties. The benefit for our customers is that they get the most reliable bonds at some of the lowest possible rates.
Bad Credit Bonds
Warehouse bonds can also be obtained by applicants with lower credit scores. Thanks to our Bad Credit Program, applicants who struggle with their credit score are given the opportunity to get bonded and work on improving their score. By improving their score, they can then get a lower rate on their bond next time around.
Bonding rates for bad credit warehouse bonds are somewhat higher than standard market rates, to make up for the increased risk. The exact cost is determined for each applicant individually. We always look for the best rates for each of our clients, regardless of their credit score or financial standing.
How to Get Your Warehouse Bond
To apply for your warehouse surety bond or to request a free quote, fill in and submit our online surety bond application. We process these bonds fast, so you can expect to hear from us shortly.
You can always gives us a call at 866.450.3412 to speak to our surety experts and have all your questions answered regarding warehouse bonds. Don’t hesitate to call!