Surety bond cost calculator

A surety bond premium is a percentage of the bond amount, and the percentage depends on the bond type and on the principal's credit and financials. This tool turns a rate you have been quoted, or a rate schedule you are testing, into a dollar premium. Every rate it opens with is an example. Nothing here is a quote.

How to use it

1. Bond amount (penal sum). The face amount of the bond. For a license or permit bond it is set by the agency or statute. For a contract bond it follows the contract price or the owner's requirement, as written in the bond form or bid documents.
2. How the rate is quoted. Choose a flat percentage of the bond amount or a tiered schedule, which is common for contract bonds.
3. Flat rate or schedule. For a flat rate, enter the percentage from the surety or your agent. For a schedule, edit up to five bands: the top of each band and its rate. Leave the last band's limit blank for "and above".
4. Credit and underwriting adjustment. 100% means the rate as quoted. Enter the factor your surety applies for your credit and financial statements, if it gave you one.
5. Term and minimum premium. The number of years you will pay, and the surety's minimum premium.

The math

For a flat rate, premium = bond amount × rate. For a schedule, each band's rate applies only to the part of the bond inside that band. Then the tool multiplies by the adjustment, raises the result to the minimum premium if it is lower, and multiplies by the number of years.

A hypothetical example with the example schedule (2.5% on the first $100,000, 1.5% to $500,000, 1.0% to $2,500,000, 0.75% to $5,000,000, 0.7% above that) and a $1,000,000 bond:

• First $100,000 at 2.5% is $2,500.
• Next $400,000 at 1.5% is $6,000.
• Last $500,000 at 1.0% is $5,000.

The premium at the schedule is $13,500, an effective rate of 1.35%. With a 120% adjustment it becomes $16,200.

Assumptions and limits

• The schedule is an example, not a market rate. Sureties price each bond on its type and on your credit, working capital, experience and financial statements.
• The tool multiplies the yearly premium by the term. License and permit bonds usually renew each year. Contract bonds are usually charged once per contract, so leave the term at 1. Ask your agent how the final premium is figured if the contract price changes.
• If the bond amount runs past your last band, the tool warns you and charges nothing for the part above it. Fix the schedule so the last band has no upper limit.
• A surety bond is credit, not insurance for you. If the surety pays a claim, you must repay it under the indemnity agreement. The premium is the price of the surety's guarantee to the obligee, not protection for your own losses.
• Fees, taxes, agency charges and collateral requirements are not included.
• Whether you qualify for a bond, and for how much, depends on your bonding capacity. The tool does not test it.

For how sureties price and what they ask for, read what a surety bond costs and how it is priced and surety bonds explained: how they differ from insurance. Contract work is covered in bid, performance and payment bonds: how contract surety works and regulated trades in license and permit bonds: who needs one and how they work. The glossary explains a surety bond and bonding capacity.