Washington, D.C., Surety Bond Overview
Often times, states require businesses or individuals to get a surety bond as a way to ensure compliance with certain rules, laws, or regulations. Similarly, various types of businesses in Washington, D.C. require a surety bond before they can obtain their business license. Contractors, too, may be asked to post one or several bonds before they can perform work on public construction projects.
What's the purpose of the surety bond?
The purpose of the surety bond agreement is to guarantee that the bonded party (the bond principal) will comply with certain conditions. For example, a usual bond condition is that the principal will comply with sections of the state law that apply to their line of business. If, instead, the principal violates the conditions of the bond agreement, causing losses or damages, a claim can be filed against their bond. In this way, the bond is also a form of financial security which is for the benefit of any harmed individuals, the public, and the state.
Want to know more about how surety bonds work? See our 'What is a surety bond' guide for a complete explanation!
Ready to get bonded? Find the bond you need in the table below! To learn, instead, more about the different types of bonds in D.C., see the sections that follow.
Types of Surety Bonds in Washington, D.C.
To help you better understand what type of surety bond you are required to post, it’s easiest to separate them into three main categories:
License bonds are the largest category of bonds, and they are required from businesses who need to get a business license or permit. The bond guarantees that businesses will comply with applicable rules and regulations and that they will not use unethical business practices.
Construction bonds are another frequently required category of surety bonds. When there is a construction project (especially if it’s a public one), the project owner can require that contractors post several types of contract surety bonds, which guarantee the project will be completed on time and as described in the contract.
Court bonds are less frequently required. If a court appoints an individual as a fiduciary, or if someone wants to appeal a court decision to a higher instance, this may require a court bond.
How Much Does it Cost to Get Bonded in Washington, D.C.?
The cost of your bond is equal to a fraction of the total amount of your bond. The bond amount is the maximum amount of compensation that is covered by the bond agreement. This amount is determined by the party that requests the bond.
Your bond cost, or bond premium, on the other hand is determined by the surety bond company when you apply to get bonded. It is paid yearly or every other year and is influenced by a number of financial factors.
How does the surety determine the premium?
The most important financial factor that sureties evaluate is the applicant's personal credit score. The higher their score, the lower their premium is. Typically applicants with a score of 700 FICO or more are offered a premium between 1% and 4% of their bond amount. Sureties may sometimes also consider other factors, such as the following:
- Financial statements
- Availability of liquid assets
- Industry experience
Want to get an estimate of the cost of your bond? Try our surety bond cost calculator below!
Surety Bond Cost Calculator
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What if I have a low credit score?
Getting a surety bond for applicants with bad credit (or no credit history) can be harder, because bonding companies assume a higher risk when underwriting bonds for them. Some surety bonds, such as those for contractors, cannot be obtained with bad credit.
If you have a lower score, you can expect to get bonded at a rate between 5%-15% of the total bond amount. Rates for applicants with lower scores are due to sureties requiring a greater guarantee when issuing bonds under these conditions. Applicants with lower scores can improve their bond rate over time by raising their credit score, and improving their overall financials.
To learn more about how bond rates are determine, have a look at our surety bond cost page.
Apply For Your Washington, D.C., Surety Bond
Follow the instructions below, depending on the type of bond you will require.
License bond application
Complete our online application to apply for a license bond. We will provide you with a free and precise quote within a short amount of time.
Contract bond application
Download and complete the online form you require, depending on your bond amount. Send the completed form to us and we will contact you as soon as we have processed it.
Do you have any questions about getting bonded in D.C.? Call us at (866)-450-3412 to speak to one of our experts!