Getting a Surety Bond in Texas
The Most Common Texas Surety Bonds
How Much Do Texas Surety Bonds Cost?
The cost of a surety bond in Texas is defined as a percentage of the bond coverage, amount, penalty or limit. Most Texas surety bonds range in cost from 0.5% to 3.0% of the bond amount. Factors that influence the cost of a particular bond include the owner’s personal credit history, business credit history, years in business, and professional license history. A good surety bond agent will identify the best price among A-rated national surety companies for each individual applicant based on the specific situation.
Some Texas surety bonds can be purchased without a credit check or any other consideration of the applicant’s financial wherewithal. Other types of surety bonds such as bonds in excess of $100,000 or those which provide a strict financial guarantee require much more extensive underwriting. These surety bonds may involve an in-depth review of personal financial statements including asset verification along with a review of audited business financials. In some cases, a co-signer or a commitment of collateral deposit (typically cash or cash equivalent) may be used in Texas to strengthen an application and secure an approval.
The risk of a surety bond is underwritten by an entity called a surety company. The risk of a loss or a claim is transferred to the surety company, effectively providing an indemnification or guarantee to the bonded client in exchange for the premium. As a client, it is important to use a fully license, authorized and financially sound surety company to back your surety bond. As your agent, Surety Bonds Direct ensures this is the case by exclusively working with AM Best A-rated surety providers.
More on Key Texas Bond Requirements
Surety bonds are required in Texas for several different state occupational business licenses across a wide spectrum of industries. Additionally, bonds may be needed for individuals to properly register and claim ownership of a car or other motor vehicle when the original title is lost, defective, or has been stolen.
Texas surety bonds vary significantly with regard to required coverage amounts. Most bonds that are needed in connection with a business license application or renewal typically range from $5,000 to $100,000 in required bond coverage. Surety bonds needed due to a lost or defective motor vehicle title are written in a coverage amount or limit equating to 1.5 times the vehicles value as required by the Texas Department of Motor Vehicles. This bond amount can be estimated on the Texas DMV website.
Larger surety bonds in Texas include contract bonds and probate bonds. Contract bonds are required by construction project owners to guarantee a general or specialty contractors performance and payment obligations pursuant to the terms of the construction contract. These bonds typically ranging in amounts or limits of $100k to several million dollars based on the value of the project.
Probate bonds are a type of fiduciary bond required of courts across the state of Texas. Probate surety bonds serve to indemnify the duties of guardians, administrators, trustees, executors and other appointed fiduciaries. These bonds are purchased to cover custodians of the estate of a deceased person, a minor or an incompetent individual. More specifically, probate bonds protect the court, organization or heirs of an estate in a situation where assets are improperly distributed or when the fiduciary engages in other unethical behavior in administering the probate process.
A few of the most common surety bonds in Texas include Motor Vehicle Dealer Bonds, Mixed Beverage Sales Tax / Gross Receipts Tax Bonds, Freight Broker BMC 84 Bonds, and Over Axle / Over Weight Permit Bonds.
An Independent (GDN) motor vehicle license is the basic Texas motor vehicle dealer license that authorizes a person to buy, sell or exchange the type of used vehicle for which the GDN license is issued in the state. The Texas Department of Motor Vehicles requires that used auto dealers engaged in the GDN categories of motor vehicle, motorcycle, wholesale only, wholesale motor vehicle auction and independent mobility motor vehicle all furnish a surety bond to legally operate in the state of Texas.
Texas residents and businesses having applied for a permit required by the Texas Alcoholic Beverage Code in accordance with Chapters 151 and 183, Texas Tax Code must furnish a Mixed Beverage Sales Tax or Gross Receipts Tax Surety Bond to the Texas Comptroller of Public Accounts. The purpose of this surety bond is to guarantee that the bonded principal pays all taxes, interest, penalties and costs accruing against the account.
Although the Freight Broker BMC 84 Bond is technically a federal bond requirement mandated by the Federal Motor Carrier Safety Commission (FMCSA), numerous Texas transportation brokers, motor carriers, ICC brokers, freight forwarders and related trucking businesses are subject to this bonding requirement. At Surety Bonds Direct, we file freight broker bonds electronically with the FMCSA on your behalf free of charge.
Lastly, motor carriers with vehicles and loads exceeding legal size and/or weight limits in Texas must secure an oversize/overweight (OS/OW) permit from the TxDMV to legally travel on Texas roadways. In many cases, a surety bond must also be filed with the Texas DMV (TxDMV) in an amount set by the Texas Department of Transportation (TxDOT) and payable to TxDOT.
The purpose of the Overweight or Super Heavy Permit Bonds is to help cover damages and other wear and tear on the highway from operation of the equipment for which the corresponding permit is issued. The surety bond may be required when a permit is issued to operate under the provisions of Chapter 623, Transportation Code. A similar surety bond is also required for several Texas counties including Chambers, Fort Bend, Harris, and Montgomery.
Where are Surety Bonds in Texas Filed?
Key government authorities (referred to as “obligees”) requiring surety bonds in the state of Texas include;
- Texas Comptroller of Public Accounts which oversees Mixed Beverage Bonds, Motor Fuel Tax Bonds, and Sales Tax Bonds;
- Texas Department of Motor Vehicles which oversees Motor Vehicle Dealer Bonds and Bonded Titles/ Certificate of Title Bonds;
- Texas Secretary of State Registration Unit which oversees Credit Service Organization Bonds, Health Spa Bonds, Third Party Debt Collector Bonds, and Athlete Agent Bonds;
- Texas Alcoholic Beverage Commission which oversees Conduct and Performance Bonds;
- Texas Department of Housing and Community Affairs, Manufactured Housing Division which oversees Manufactured Housing Licensing Bonds for Retailers or Brokers;
- Texas Department of Transportation which oversees Over Axle & Over Weight Permit Bonds;
- Texas Department of Insurance which oversees Public Adjuster Bonds and;
- Texas Health and Human Services Commission which oversees Medicaid Provider Bonds
List of Texas Surety Bonds
For the administrator of an estate to ensure settlement duties are handled properlyAirline Reporting Corporation (ARC) Bond
For travel agencies accessing the ARC systemAlcohol Beverage or Conduct (TABC) Bonds
For businesses licensed to sell, manufacture, import or warehouse alcohol and liquor productsAlcohol Tax (Federal TTB) Brewer, Distiller or Wine Bond
Required by the Alcohol and Tobacco Tax Trade Bureau (TTB) for brewers, distillers, and winemakers. (Federal Requirement)Appeal Bond (Supersedeas Bond)
For the holding process of appealing a judgment in a higher courtAthlete Agent Bond
Required by agents to guarantee contractual and financial responsibilities to the athleteBNSF Railway Company Bond
For those purchasing transportation services and/or trailer privileges from BNSF Railway CompanyBid Bond
For submitting proposals for construction projectsBingo License Bond
For those involved in the promotion or sponsorship of bingo gamesBond of Seller (Sales and Use Tax Bond)
For certain sellers of merchandise in CaliforniaBonded Vehicle Title
For claiming ownership and registering a vehicle when the title was lost, defective, or stolenBusiness Service Bond (Protects Your Customers from Theft)
Protects your customers from acts of theft, larceny or fraud committed by you or your employees
For those who are authorized to promote various sporting eventsConcessionaire Bond
For conducting business on third party premisesContract Postal Unit Bond
For authorized supplier operated postal service unitsContract/Construction Bond
For ensuring a construction job is completed according to the contractContractor License Bond
For licensed contractors to ensure compliance with state or local regulations and statutesCourt or Probate (Fiduciary) Bond
To protect a party in a legal process or guarantee the duties of a fiduciaryCredit Services Organization Bond
For those who offer professional credit servicesCustodian (Veterans Affairs Fiduciary) Bond
For federal VA fiduciaries serving as legal custodiansCustoms Bond
For businesses that ship goods into the United StatesDebt Collector / Collection Agency Bond
For agencies engaged in the business of debt collectionDriver Education School or CDL Tester Bond
For those engaged the business of providing driver training education or testingDurable Medical Equipment Suppliers (DMEPOS) or Medicare Bond
For suppliers of durable medical equipment, prosthetics, orthotics and other medical products (Federal Requirement)
For employee benefit plan administratorsEmployee Theft / Dishonesty Bond
Protects against financial losses from employee unethical acts committed by employeesEscrow Agent Bond
For those providing escrow servicesExecutor Bond
For Executors in the estate settlement processFarm Labor Contractor Bond (Federal H-2A)
For agricultural H-2A employers (Federal Requirement)Federal Maritime Commission OTI Bonds - OFFs, NVOCCs
Federal Maritime Commission (FMC) licenses for OTIs and NVOCCs (Federal Requirement)Freight Broker (BMC-84) Bond
Federal Motor Carrier Safety Commission (FMCSA) for those operating as transportation brokers (Federal Requirement)Fuel Tax Bond
For businesses that use, sell, distribute, or mix motor fuel
For proper handling of funds entrusted to the legal guardian of a minor or incapacitated individualHealth Spa or Club Bond
For those who operate health clubs, gyms, spas and other fitness facilitiesHome Improvement Contractor Bond
For state licensed home improvement contractors
For those licensed to sell, negotiate and transact insurance businessJanitorial (Cleaning) Service Bond
For protecting your customers from losses caused by your employees during cleaning process
For livestock market agencies, dealers and packersLoan Services or Broker Bond
For those who broker loans or provide other loan servicesLost Security or Instrument Bond
For lost or misplaced security certificatesMaintenance Bond
For protecting against defective materials and workmanshipManaging General Agent Bond
For those acting as managing general insurance agentsManufactured Home Broker, Retailer or Installer Bond
For those who sell, broker or install manufactured homesMedicaid Provider (DME) Bond
For those who sell durable medical equipmentMixed Beverage Sales Tax or Gross Receipts Tax Bond
For state taxes, fees and penaltiesMoney Services Bond
For those who issue payment instruments or exchange or transmit fundsMortgage Broker or Loan Servicer Bond
For professionals engaged in brokering, originating, lending and other mortgage servicesMotor Vehicle Dealer Bond
For auto dealers or others who buy, sell, auction, or repair cars or other motor vehiclesMotor or Automobile Club Bond
For membership fee based automobile or motor clubs
For commissioned notary public officialsNursing Facility Resident Trust Fund Bond
For businesses offering long term care to patientsOutdoor Advertising Bond
For outdoor advertisersOver Axle & Over Weight Permit Bond
For overweight or oversized vehicles to legally operate on public highways
For ensuring that subcontractors and suppliers are paidPerformance & Payment Bond
For guaranteeing satisfactory completion of a projectPermit or Right of Way Bond
For right-of-way work along public highways, streets and other roadwaysPharmacy Wholesaler Bond
For those engaged in pharmaceutical drug distributionProcess Server Bond
For those authorized by law to perform process proceduresProfessional Employment Organization (PEO) Bond
For businesses that provide employer servicesProfessional Fundraiser Bond
For those authorized to legally raise money or solcit business for various organizationsPublic Insurance Adjuster Bond
For licensed professionals engaged in insurance adjustingPublic Official Bond
For public officials to protect against violations of dutyReal Estate School Bond
For those providing real estate educational programs to studentsRelease of Lien Bond
For the discharge of liens against propertyReplevin Bond
For plaintiffs in a court of law to secure property from the defendantResident Funds (Nursing Home) Bond
For those providing nursing facility services
For authorized sellers of merchandise in the stateService Contract Provider Bond
For licensed service contract providersSite Improvement Bond
For ensuring project improvements and renovations are executed properlySolicitation Bond
For licensed telemarketers and telephone solicitorsSolid Waste Transporter Bond
For those engaged in the transportation of solid wasteSubdivision Bond
For protection against public project defaultsSupply Bond
For guaranteeing that suppliers deliver as requiredSurplus Lines Broker or Agent Bond
For professionals authorized to broker surplus insurance lines businessTalent Agency Bond
For those who legally procure employment for professional artistsTax Collector Bond
For professionals authorized to engage in tax collectionTitle Insurance Agent Bond
For those who engage in the negotiation and sale of title insurance policiesTobacco Products Distributor Bond
For businesses that manufacture, sell or warehouse tobacco productsToll Surety Bond
For toll road and turnpike usersTrustee Bond
To ensure that a court or document appointed trustee faithfully performs his or her dutiesUtility Deposit Bond
To provide a financial guarantee for individuals and businesses that buy from utility companiesWage and Welfare Bond
To ensure unionized businesses meet contractual labor obligations