Iowa Surety Bonds
Iowa surety bonds are often used by companies located within the state. In others cases, individuals may use one for a court case involving probate matters or an appeal. Lastly, out of state companies may be required to post surety bond in Iowa in order to do business within the state.
How do I apply for a surety bond in Iowa?
Applying for your bond is easy. Choose your bond type from the drop down list below then click “Get Your Bond Quote”.
Most bonds are approved as soon as your application is received.
Why do I need an Iowa Surety Bond?
Surety bonds in Iowa protect consumers of your business. In most cases, they’re a requirement to get a state license for your company. In others, they’re required to guarantee your performance of a contract. However, the premise behind most bonds is to ensure you do what you agreed to do. For example, let’s look at the bond Iowa requires of travel agencies. It’s needed before you can register your travel agency with the state. But what does it protect against? In this case, the bond protects against your failure to pay court judgments against your company. Keep in mind that if the surety bond pays out, you’re responsible for paying the surety company back. So, why does your company need an Iowa surety bond? Because a city, county, state, or other entity says you do in order to do business with them.
What are the different types of bonds in Iowa?
Earlier, we discussed a bond required to sell travel in the state. This falls into a class of Iowa surety bonds called license bonds. Any bond required to get a license in the state would also fall under that category. However, there are others needed by contractors and the court system which we’ll discuss below.
What’s an Iowa License Bond?
License bonds are those needed to get a state license. These bonds are usually required by a state or local municipality when you want to do business in that state or town. The most popular types are called contractor license bonds. They can be required by both states and local governments to become a registered contractor or pull a permit for a construction project. Generally, these Iowa surety bonds seek to guarantee you’ll follow state and/or local codes. If not, these government entities can claim on your bond for fines, fees, or the cost to bring the project up to code. They’re often called code compliance bonds.
There are many other types of license bonds in Iowa. In most cases, you don’t know that one is needed until you see it on your license application. A partial list of these bonds is mentioned above under “How do I apply for an Iowa Surety Bond”.
What’s an Iowa Performance Bond?
Performance bonds are those used to ensure a contract is completed. They’re needed for public construction projects and, in some cases, private construction projects and contracts. In their simplest form, these bond types guarantee that you’ll perform a contract as the contract indicates you should. This includes finishing the job on time, according to the engineer’s specs, and of an acceptable quality. Speaking about quality of work, an owner, city, or whomever is letting the contract may require what’s called a maintenance bond upon your completion of the contract. These bonds protect the contract owner if your company performs faulty work.
Who do Iowa surety bonds protect?
This is a great question and the most understood when it comes to bonding. A surety bond isn’t meant to protect your company. It’s meant to protect your clients, customers, and the like from financial harm. Too many times do we hear contractors or car dealers tell there customers not to worry because they’re bonded. It’s true, the bond offers protection to the customer. However, many bonded companies don’t understand they’re required to pay back the surety company for any losses it pays out. Additionally, they’re also responsible for paying the surety company’s costs other than claim payments. This means your company could be on the hook for even more than the bond amount if a claim occurs.
How much does a surety bond cost in Iowa?
Your surety bond cost depends a lot on your personal credit score. In most cases, surety companies determine your cost by the information listed on your credit report. In others, they don’t require a credit check at all and it’s instantly approved. When bond amounts are very large, they may require a financial statement to help lower your cost. Regardless, your bond cost should be about 0.5%-3% of the bond amount needed but your bond cost also increases as your credit score decreases. Applicants with derogatory credit information can expect to pay more than 3%.