Alabama Surety Bonds

Overview of Alabama Surety Bonds

Surety bonds are frequently required in the state of Alabama of applicants for a business license. Bonds may also be required of contractors who wish to bid or perform on federal or state construction projects.

What’s the purpose of the bond?

Surety bonds are required as a form of guarantee that any bonded party will comply with state laws and regulations, such as the Code of Alabama, that concern their type of business.

Similarly, to perform work on certain construction projects, contractors are frequently required to obtain bonds that guarantee their compliance and performance according to the conditions of their project contract.

Bonds not only guarantee compliance but offer protection if the bonded party violates the conditions of the bond. If the bonded party violates the bond agreement and causes losses or damages, wronged parties can file a claim against the bond to request compensation.

See our detailed ‘What is a surety bond’ guide to learn more about how bonds work.

Read on for more information about the different types of surety bonds in Alabama, how much they cost and how you can apply.

Types of Alabama Bonds

There are three main types of surety bonds that are issued for the state of Alabama:

• license and permit bonds
• contract bonds
• court bonds

License & Permit Bonds

Alabama businesses who need to get licensed in order to operate lawfully are often required to obtain a license bond. To find out if you need to get bonded, contact the Alabama Department of Revenue or the Division which issues your type of business license.

This bond guarantees that you will conduct business in accordance with the provisions of the Alabama Code that apply to you.

If you are looking for a specific license bond in Alabama, you can search for your bond in the table below.

Contract Bonds

Contract bonds, such as performance and payment bonds, are usually required by Alabama contractors when they begin work on a federal, state or private construction project.

Under the federal Miller Act and the Alabama Little Miller Act, to perform on construction projects over certain dollar amounts, contractors need to obtain bid, performance, and payments bonds.

Court Bonds

Court bonds are sometimes required by Alabama courts. When appealing a judgment, appellants may need to obtain an appeal bond. Fiduciaries in Alabama may also be required to post a fiduciary bond.

Can’t find what you are looking for? Call us at (866)-450-3412 to receive assistance and advice from one of our Alabama surety bond experts at Bryant Surety Bonds.

How Much Does it Cost to Get Bonded in Alabama?

How much your bond will cost is determined by the type of your bond and the bonding amount. All bonds have different amounts, and these are determined on a state level.

What is the difference between bond cost and bond amount?

The bond amount is the maximum amount of compensation guaranteed by the surety that issues your bond. In other words, this is the maximum amount of money the surety may provide to someone who files a claim against your bond. The cost of your bond is equal to a percentage of its amount.

For example, the Alabama auto dealer bond has a fixed amount of $25,000, as does the mortgage broker bond in the state. These amounts may differ in other states. The $75,000 freight broker bond, on the other hand, is fixed and has the same amount across all states

Contract bonds also have different amounts and these are determined by the specific project that contractors are obtaining a bond for.

What determines the cost of my bond?

Your bond’s cost or premium is a fraction of the full bond amount. It can vary between 1%-4% of the total bond amount for standard market rates and 5%-15% for applicants with bad credit.

How high your bond rate will be, depends on a series of financial factors that sureties take into account when reviewing your bond application. These factors are:

• Personal credit score (most importantly)
• Personal and business financials
• Your industry experience
• Other financial and business factors

Standard market rates are usually offered to applicants with a high credit score, one of 700 FICO or more.

Can I get bonded if I have a low credit score?

Yes, even if you have a low credit score or have no credit at all, you can still get bonded.

Applicants with less than perfect credit, bankruptcies or other financial difficulties are offered higher rates due to the higher risk involved in bonding them. Applicants like these can apply for a bond through the Bad Credit Surety Bond Program.

If such applicants improve their credit score over time, they can apply to get bonded at increasingly better rates.

To get an estimate on your surety bond rate in Alabama, try our surety bond calculator below!

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Surety Bond Cost Calculator

Bond Type Select Your Required Bond Auto Dealer BondCollection Agency BondContractor License BondDebt Collector BondFreight Broker BondMedicare/Medicaid BondMortgage Broker BondRetail & Professional Services BondSchool BondSmall Loan Company BondSports Permit BondTax & Utility BondTelemarketing BondTravel Agent BondAll Other License Bonds

State Requiring the Bond Select Your State Alabama Alaska Arizona Arkansas California Colorado Connecticut Delaware Florida Georgia Hawaii Idaho Illinois Indiana Iowa Kansas Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota Mississippi Missouri Montana Nebraska Nevada New Hampshire New Jersey New Mexico New York North Carolina North Dakota Ohio Oklahoma Oregon Pennsylvania Rhode Island South Carolina South Dakota Tennessee Texas Utah Vermont Virginia Washington Washington D.C. West Virginia Wisconsin Wyoming

Surety Bond Amount ($)

Select Your Credit Score Please select Above 700 650 - 699 600 - 649 550 - 599 549 and under

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If you would like to find out more what sureties take into account when determining the rate of your bond, have a look at our highly informative Surety Bond Cost page.

How to Get Bonded in Alabama

There are two different ways of applying, depending on the type of surety bond you want to get.

License bond application

To apply for a license bond, complete our online surety bond form. You will soon be contacted by one of our experts with a free and exact quote on your commercial bond.

Once you’ve heard from us, you will need to supply us with a few more documents before we can underwrite your bond. The process is simple and straightforward.

Contract bond application

To apply for a contract bond, download, complete and send us the contract bond form that applies to you. Once we receive your form, we will contact you with more information about getting bonded.

If you require more information, you can always call us at (866)-450-3412 to consult one of your surety bond experts.

Further Reading

About the author:

Todd Bryant

Todd Bryant is a graduate of Germantown Academy and the University of Pittsburgh College of Business Administration Honors College. He has been President of Bryant Surety Bonds, Inc., an A+ rated Business with the Better Business Bureau, since 2007. Licensed as a producer with the Department of Insurance, he has been published in the National Association of Surety Bond Producers newsletter and on numerous authoritative publications such as The Washington Post, Entrepreneur.com, Azcentral.com and many more.