A Surety Bond Renewal is an extension of the surety bond term by the surety company. All surety bonds have a term for which they are valid and enforceable. This means that in exchange for the premium paid, the surety company is willing to take on the risk of the bond for a specified time period.
During renewal, a surety bond underwriter will again evaluate the risk for the bond similar to executing a new bond. However, in most cases the principal will not be required to sign another indemnity agreement nor will a new bond be executed, unless required by the obligee. The principal will be required to pay a new premium for the renewal bond term.
For example, an insurance agent and broker surety bond is a license and permit bond that may offer 1 year, 2 year or even longer terms. At the end of the bond’s term, the surety company will re-underwrite the bond and set a new premium based on the new term desired by the principal. The principal is usually required to pay the renewal premium before the expiration date of the old bond or sooner. The principal or the surety company then notifies the obligee of the bond renewal term and the bonding requirement for the license or permit is fulfilled until the next expiration date.