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Several questions and concerns come up regarding the renewal process and terminology when the time arrives to renew your surety bond. Within this guide, we have summarized Surtey’s bond renewal process, along with frequently asked questions to help ease and simplify the procedure. Although this guide is directly correlated for those associated with The Surety Place, the material is relevant and constructive no matter where your bond has been purchased.
Surety Place provides the quickest service while reducing confusion between the obligee, surety, and our customers as part of our explicit renewal process. Although we are here to answer all your questions, it is beneficial to know some of the most commonly used words when renewing your security bond.
Obligee: An entity that requires the bond, often the government agency in charge of regulating or licensing an industry
Principal: Individual or business that must obtain a bond as required by the obligee
Surety: The insurance company that financially backs the principal’s bond by guaranteeing money is available to cover potential claims
Bond term: The time during which the bond between the principal and surety is in effect.
Notice of Cancellation: A surety company can cancel a principal’s surety bond by providing this notice mailed to the obligee.
Cancellation period: Once the obligee receives a notice of cancellation, it will recognize the bond in force for the cancellation period; in a set number of days, the bond will remain in effect. The number of days could be 30, 60, 90, etc. and as specified by the bond form.
Renew by date: The date is determined by subtracting the number of days associated with the cancellation period from a bond’s term. For example, if a cancellation period is 60 days and the bond terms end on July 30th, the new by date is April 30th.
The renewal process can be somewhat alarming for those new to the industry of surety bonds. To help avoid unwanted confusion, the following information will explain the timing of renewal payments.
Invoices for the renewal of surety bonds are usually submitted to the principal months before the surety bond ends. Payments are due prior to the expiration date of the surety bond. Although some principals may delay paying for the renewal until the bond’s expiration date, unfortunately, that is not how the renewal process works. Bonding companies are required to collect renewal premium payments before the bond expiration date in the diction of surety bonds. For example, each surety bond has a cancelation provision that defines how much advance notice to be offered by bonding companies for the principal and obligee before the bond’s expiration date. Many cancelation provisions require written notice either 30 or 60 or 90 before expiry. Therefore cancellation provisions must be considered when deciding when renewal payment will be due to the bonding companies; as previously explained, it can be a few months away before the bond expiration.
Those who work with Surety Place will not have to concern themselves with knowing if their bonds are due for renewal. As a promise to you and for your interest in seeking Surety Place service, you will receive a notification from your surety bond producer when one of your bonds is due for renewal.
Surety Place renews dozens of bonds per week, and we have encountered many of the same questions from customers during the process. To help everyone understand, we have listed some of the most frequently asked questions for bond renewal.
We strongly advised that you renew your bond as soon as possible after your surety bond producer has contacted you with your renewal notice or quote. By renewing your bond early, you eliminate the risk of any issues from disrupting the renewal of your license or registration, however unlikely the problems may be.
You must pay the full amount quoted at the time of the renewal to extend your bond. Either online or over the phone with a Surety Place team member are your options to renew your bond. You will receive an email confirmation of payment within a few minutes after completing the payment process. The bond renewal information will be sent In a separate email and typically arrives within a 24-hour time frame.
Surety Place has a customer service staff committed to offering competitive rates and aims to provide a lower quote by evaluating all markets available when possible, but be aware that a lower rate may not always be available. Underwritten bonds require an analysis of personal financials using an underwriting process before your renewal quote can be determined. Changes to bond requirements, lower or higher credit score since the last review, or changes to the principal’s situation like housing change, bankruptcy, etc., may affect the renewal premiums. Furthermore, the premium is subject to change if the renewal quote has expired when the new underwriting review must be performed.
You may receive a notice of cancellation from the surety company explaining that your bond will be canceled at the end of the cancellation period if you do not renew your bond before your renewal date.
Notices of cancellation are often issued if your bond is passed on to a new surety company at renewal. Your former bond has been canceled, and a new bond was issued for your renewal term if you receive this notice. If you obtain this notice, your bond may have been moved to another market due to a better rate being discovered, or your former bonding company no longer writes the bond. In this situation, even though you are renewing your bond, the old bond must be canceled before the new bond can be acquired.
A surety company may terminate a bond on a variety of grounds. For example, if a claim or allegation is filed against a bond or the bond is not renewed by the principal. Surety company can also automatically send a notice of cancellation if their system recognizes a bond has not been renewed by the renewing by date, before the end of the bond term. By renewing your bond on or before the renew date, you can prevent receiving a notice of cancellation.
Suppose, for any reason, a principal does not renew by the renew by date. In that case, they risk cancellation of their bond, lapse in coverage, suspension or loss of license, rate changes, or having to apply for an underwritten, credit-based bond again.
If you do not renew your bond, there may be many possible consequences that could happen. For instance, you no longer have a bond since it is expired. No longer holding a bond does not fulfill the licensing requirements. However, for any reason, you no longer require a bond then this outcome is not a worry. If you still need a license, then you must obtain another bond. Continuing your operations without fulfilling license requirements could result in your license suspension or cancellation entirely. In that case, you will have to start the licensing process over again from the beginning. You will have significant legal issues if your license lapses and you proceed to run your business, which is often considered a misdemeanor offense.
Still need to renew your bond or have additional questions, the professionals at Surety Place professionals are here to help you. Submit a request by visiting Suretyplace.com or contact our customer service team.