Maybe you’re proactive or maybe you’ve waited to the last minute. All you know for sure is you need a surety bond and have no idea how long it will take to get one. Great question that I’d love to answer for you. As with many things in life the answer depends. First, I’ll give you a general answer for everyone in a rush. Then we’ll dig into the details to hopefully answer how long your specific bond need may take.
The Short Answer
Most small, single license bonds can be underwritten and executed in the same day. Likewise, larger, single license bonds can often be done same or next day if you’re able to quickly provide all the necessary underwriting information. More complicated, riskier bond types or accounts needing multiple bonds with large aggregate bond amounts — such as money transmitters, PEOs, contractor bid bonds or performance and payment bonds — require more underwriting. However, they can still be finished in just a few days, again depending upon how quickly info is provided.
In general, a good surety bond broker should be able to get a bond for you fairly quickly. This can depend greatly on a variety of factors that may significantly influence the time it takes. Let’s take a closer look at these to help everyone involved to set reasonable expectations of each other.
A Closer Look
Some surety bond types are just riskier than others. To surety carriers, risk equals the likelihood of a bond claim for which they will not be indemnified. Much less underwriting information is required to approve a bond type that rarely has claims.
Here’s an example: If you need a $25,000 state license bond for your finance lender license in California, then all I’d need is a completed, signed one-page bond application that just can be emailed to me. I’d quickly do a soft pull credit for the underwriting, then email a firm quote back to you. If you approve the quote and select your shipping preference, the bond could be executed and sent out the same day.
On the flip side, riskier bond types require more information so the underwriter can make an informed decision on whether or not the bond is a good risk for the carrier.
Let’s consider a bid bond or final performance and payment bonds for a contractor in this example. You will have to provide the RFP or contract showing the details of the job, the bond forms and some kind of application at minimum, so the surety knows what the bond is covering. Then depending on other factors, you may need to provide additional information such as a contractor questionnaire, business and/or personal financials or cash confirmations. Once you get the initial info to your broker, they’ll work with the carrier to underwrite the bond. There may be additional questions or information needed after the initial review, which will require your input.
This can go quickly if all sides are very responsive, but it can also take several days. Bottom line, the more underwriting information needed because of the bond type, the longer it will take to get that bond. Not only will it take you more time to put it all together, it takes the underwriter more time to review.
Bond size makes a difference in the time it takes to get the bond. The reason is similar to the bond type risks. Small bonds are less risky than large bonds. In general, the larger the bond amount, the more underwriting information will be required and longer it is likely to take.
Some people and companies need multiple bonds. In these cases, both the total number of bonds and the aggregate bond amount can affect the time it takes to get them. The total number of bonds matter simply because it takes more time to execute 25 bonds than it does five. The total aggregate bond amount is equal to all the individual bond amounts added together. Larger aggregate amounts are riskier than smaller aggregates, which again can lengthen the time it takes to get the bonds.
Some surety bond brokers have the ability to underwrite and issue bonds themselves instead of having to send it to the surety carrier for underwriting. We call this in-house authority. Typically, in-house authority has some single and aggregate bond amount limits and will include and exclude certain bond types. The more and better in-house authority a surety bond broker has the faster they can get the bond done for you.
Let’s not forget your role and responsibility as the principal greatly influences the timing. Regardless of the amount of underwriting information needed, if the principal provides information to the broker quickly, then the principal should get the bond faster. If principal is slow to respond, every other aspect will consequently move more slowly. In our experience, this is probably the largest factor in how quickly someone can get a surety bond.
Broker’s, Surety Carrier’s Time
Most people have ebbs and flows in their work volume, and it’s not different for brokers or surety carriers. Independent of all the factors above, whether or not the broker or carrier is slammed can be a factor in how long it takes to finish the bond. The broker may be working quickly, but it’s out of their hands once they’re submitted everything needed to the carrier for approval. In those case where bonds that can be written with in-house authority, it’s a matter of the broker providing the best customer service they can while getting to everyone’s needs as fast as they can.
Once approved and executed, most bonds need to be sent to you for signature before you forward them on to the Obligee along with whatever other paperwork they need. Whether the original bond is sent via regular mail or some form of more expedited delivery makes a difference to when you receive it.
At Alpha Surety, we have an experienced staff and in-house authority with multiple surety carriers. These allow us to turn around new surety bonds as fast as possible for you. We will do all we can to help you get us the information needed for you to get your surety bond.