If you have an active surety bond you may be wondering if and when it expires. While some bonds do not have an expiration date, others are only valid for a specific period of time. To keep your bond active, you will need to know how surety bond renewal works. In this post, we will examine the renewal requirements for different bonds and explain how the typical surety bond renewal process works for EZ Surety Bonds and other surety companies.
Not every surety bond needs to be renewed. Some bonds are non-cancelable without a termination date and others are continuous until canceled, meaning they are active until the surety cancels the agreement.
Title bonds are an example of fixed-term bonds that do not need to be renewed. Another example is court bonds. Many of these bonds are non-cancelable.
While some bonds don’t need to renew with a renewal document, there may still be additional premium owed during the renewal period. Or, the bond may need to be formally released by the obligee.
Then there are other bonds such as contractor license bonds and motor vehicle dealer bonds that do renew. The bond term and renewal timing vary based on the bond type and state.
The bond type will also determine the exact renewal procedures. Some bonds require the customer to file and issue a new bond at the time of renewal. Other bonds just need payment, after which a continuation certificate is sent to the Obligee to confirm that the bond has been renewed.
It is best practice to renew your surety bond before it expires. This will help ensure there isn’t a lapse in your bonding coverage. If your surety bond is a license bond, you will need to remain active. Otherwise, you are violating the terms of your licensure.
In this case, you will know the expiration date in advance and will have plenty of time to renew your bond before it expires. How early you can renew the bond depends on the surety company and type of bond. The surety will contact you when you are able to begin the renewal process.
To renew a customer’s bond, our agency first needs to get updated renewal pricing from the surety company. This information isn’t typically available until 30-90 days before the date of expiration. Once this pricing is established, we send an invoice to the customer with details for the renewal by mail or email.
From there the renewal process is simple as the customer just needs to complete the payment to renew their bond.
As we touched on earlier, some bonds require more than payment and need to be reissued entirely. This will require you to provide the same information from when you initially received the bond.
A surety company may choose to cancel a surety bond for a variety of reasons. They cancel the bond by sending a notice of cancellation to the bond’s obligee.
After the obligee receives the notice of cancellation, the bond will remain active for the duration of the cancellation period. This period is specified in the terms of the bond.
In most cases, if you fail to renew your surety bond before it expires, the surety company will issue a notice of cancellation. Surety companies also issue notices of cancellation when bondholders switch from one surety company to another.
Your surety bond cost may change at the time of renewal, depending on the bond type. Bonds that require underwriting may require the surety company to review your information again to ensure that you represent the same level of risk as when the bond was issued.
In some cases, your premium may be lower than before. In others, it may be higher.
In addition to changes to your personal qualifications, changes to the obligee’s bonding requirements can alter how much you need to pay when renewing your bond. For example, if the obligee increases the minimum bonding requirement from $10,000 to $20,000, the surety company will charge you a higher premium.
If you do not renew your surety bond, you will typically receive a notice of cancellation from the surety company. The notice will give you the length of the cancellation period. After that, the bond will no longer be active.
If you have a license bond, failing to renew in time will result in you violating the terms of your license.
EZ Surety Bonds simplifies the bonding process for both renewals and new bondholders. With affordable rates and fast online applications, we make getting a bond a pain-free experience. Get in touch if you have questions, we’re here to help.
