The infographic, “What contributes to the cost of commercial surety bonds,” describes the surety bond premium and the different factors that are considered. The cost of a surety bond varies from one surety company to the next.
Every surety bond presents its own unique risk to a surety company. The risk on a surety bond is that the principal will default and the surety company will have to pay the bond amount to the obligee. The surety bond obligee determines the surety bond amount. A higher surety bond is more risk for the surety company, so the premium is typically higher.
Surety companies can judge risk differently. One underwriter may consider a bond to have more or less risk than another, which affects the premium.Notably, some surety bonds also require collateral to be given in addition to the premium.Refer to the infographic below for more information.