You just got a new surety bond or a quote for one. Now, you’re looking at the invoice wondering what you’re being charged. Everyone should fully understand what’s on their bill. We are happy to help explain the possible line items you may see on a surety bond invoice.
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Premium:
The largest item should always be the premium. This is what the surety carrier is charging you for taking on the risk of the surety bond. The premium is determined prior to the bond being issued through the underwriting done by the surety carrier underwriter and/or your bond broker/agent. Premiums can vary based on things like the bond type risk, state, bond amount, your financial condition, past bonding history, how long the bond is needed, etc. Surety carriers file their premium rates with each state’s department of insurance. The premium shown on your invoice should be in line with these filed rates and not marked up by the agent in any way.
Your surety bond broker will typically make a commission on your bond. This commission is most commonly included in the premium amount you see on an invoice. So, there shouldn’t be extra commission on top of your bond.
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Broker fee:
The next line item you may see is a broker fee. This is an item charged by the broker/agent for their work on the bond and is on top of whatever commission they may be receiving from the premium. Most commission dollars are typically used to compensate those employees involved in the sales & underwriting. Broker fees help the company cover other costs such as operational staff, paper/printing, credit card fees, etc. Broker fees are completely set by the broker.
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Shipping:
If you need your bond overnighted or rush delivered in some manner, you may see a shipping fee on your invoice. Most brokers don’t charge for regular mail postage. The broker decides whether shipping is charged and, if so, how much.
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Kentucky tax:
There are no taxes charged on surety bonds with one current exception. The State of Kentucky charges a surcharge for surety bonds. So, in general you should not see any tax lines on your surety bond invoice, but you will if your bond is for Kentucky. Florida did have a bond tax for several years to help with hurricane recovery funds, but that has ended.
At Alpha Surety, we never markup surety premiums so you always get the best possible rates directly from the surety carrier. We do charge broker fees to cover their costs and fairly compensate great employees. We do not charge for regular mail delivery, but we do bill for the cost of overnight or rush packages.
We are always here and willing to discuss any charge or fee with you so you will always know and feel that you’re getting a great, fair price.
If you have any questions about a surety bond invoice or quote you received, ask your broker for a detailed explanation of each line item. Even if that invoice or quote is not from Alpha Surety, we are still more than happy to review it with you, so you understand exactly what you’re being charged.