Owning a business in Maryland comes with a lot of perks, such as quick access to some of the nation’s largest cities and best seafood. However, it also comes with the same responsibilities that business owners in most states have to fulfill, such as protecting their customers by obtaining the right surety bonds.
A surety bond provides a financial guarantee that a business will obey its legal and ethical responsibilities to its customers and to its community. The process of obtaining a surety bond doesn’t have to be complicated, but it does require knowledge of how to get a surety bond at the right price and which surety bond is right for each business or individual’s needs. In this article, we’ll review how to get a surety bond in Maryland and some of the most common types of surety bonds in Maryland.
Getting a Surety Bond in Maryland
A principal applying for a surety bond in Maryland will generally follow the same process no matter which type of surety bond they need. If you need a quick explanation of surety bond basics see What Is a Surety Bond? to learn the key facts about surety bonds. If you’re wondering how to get a surety bond in Maryland, the process is:
- The principal finds the type of Maryland surety bond required by the obligee.
- The principal applies for a surety bond through the surety or surety broker. For most bonds, the principal will need to submit some basic information about their personal, legal, and financial history.
- For many bonds, the surety will perform an underwriting process based on the information provided, often including a soft credit check.
- The surety will send the principal a premium quote based on the risk level that the surety’s underwriters assess.
- The principal can pay the premium to the surety and purchase the bond, or potentially seek out another quote.
- The surety “writes” the bond and sends the bond paperwork to the principal to sign. Either the principal or the surety files the paperwork with the obligee.
Certain types of surety bonds may require a longer underwriting process, while other surety bonds don’t require underwriting at all. Next, let’s look at some of the most common surety bond types in Maryland.
Maryland Freight Broker (BMC-84) Bonds
Maryland is a hub for logistics, so BMC-84 freight broker surety bonds are a common need for Maryland freight brokers. BMC-84 bonds guarantee that the broker will fulfill their obligations and operate ethically toward the shippers and carriers that they work with.
A BMC-84 bond is federally required by the FMCSA, so Maryland freight broker bonds require a $75,000 coverage amount like every other state. Note that businesses in Maryland’s thriving maritime industry might need OTI bonds or NVOCC bonds instead, depending on their business model.
Maryland Motor Vehicle Dealer Bonds
Automobile dealers in Maryland need to obtain a Maryland motor vehicle dealer bond as part of their licensing process. This bond protects customers from unethical or illegal practices by a motor vehicle dealership.
The required coverage amount for Maryland motor vehicle dealer bonds varies by the type of dealership, such as a new car, used car, motorsports, or salvage dealership and by the number of vehicles the dealer sells annually. Required coverage can be as low as $5,000 or as high as $150,000.
Maryland Home Improvement Contractor Bonds
Home improvement contractors take on a big responsibility for the safety of their clients’ property and the quality of their work. Thus, the state of Maryland requires home improvement contractor bonds to help hold contractors accountable for their professional obligations.
The Maryland Home Improvement Commission Guaranty Fund will compensate homeowners for up to $20,000 in damages to their homes by a contractor. A contractor applying for licensure must either demonstrate the financial solvency to repay any payouts from the guaranty fund, or they must obtain a $20,000 Maryland home improvement contractor surety bond to cover their obligation.
Maryland Business Service Bonds
Maryland business service bonds protect the customers of a service business, such as a cleaning service, from theft or misconduct by the business’s employees. Business service bonds aren’t required for any kind of licensure, but they demonstrate a business’s dedication to protecting its customers, and many larger customers require them from service businesses to whom they offer contracts. For coverage amounts up to $250,000 and for businesses with up to 25 employees, Surety Bonds Direct offers business service bonds instantly with no credit check.
Surety Bonds Direct is the fastest and simplest way to get any surety bond in Maryland that you need. You can start now by getting your free surety bond quote online in just a few minutes, or get expert advice from our surety bond professionals at 1-800-608-9950.