What Is a Designated Agent Bond?
Designated agents in a couple of states across the country are required to get a license or registration prior to conducting their activities. As a part of the process, you may have to obtain a designated agent bond, which is a type of license bond.
The purpose of your surety bond is to safeguard the interests of your customers and the state in which you operate. If you fail to follow the law, you can end up with a claim against your bond. This is how harmed parties can seek a financial reimbursement for the losses they have suffered due to your illegal actions.
Bonds function as a contract between three entities. You as the designated agent are the principal that has to obtain the bonding. The state authority that regulates your trade and requires the bond is the obligee. Finally, the surety is the third party that underwrites the bond for you.
Questions about Designated Agent Bond
In which states do I have to get this surety bond?
Designated agents in Illinois need to post a $50,000 surety bond. You have to use the official bond form and provide it to the Secretary of State.
Non-dealer designated agents (in Alabama have to provide a $25,000 bond to the Department of Revenue’s Motor Vehicle Division. Such agents can be licensed financial institutions, pawnshops, as well as out-of-state financial institutions, law firms, and title agents (for manufactured homes only).
In Mississippi, designated agents have to post a $15,000 bond. The licensing authority is the Department of Revenue’s Motor Vehicle Licensing Bureau. You need to use the official bond form.
How much does a designated agent bond cost?
Your surety bond price depends on the bond amount that you are have to post as a designated agent in your state. To get bonded, you need to cover only a small percentage of it, which is the bond premium. The usual rates are between 1% and 5% of the bond amount for applicants with stable finances.
A range of factors determine your surety bond cost. When you apply for a bond, your surety has to examine your personal credit score, business financials, and any assets and liquidity that you possess. It may even look at your business experience to judge the solidity of your profile. If you are deemed as a low risk applicant, you can expect to pay less for your bond.
|Surety bond name||Surety bond amount||Above 700||Between 650-699||Between 600-649||Below 599|
Can I get a designated agent bond if I have bad credit?
Even if you are struggling with problematic finances, with Lance Surety Bonds you can still get the bond that you need. We operate our Bad Credit Surety Bonds program for applicants facing issues such as low credit scores, tax liens, bankruptcies, and civil judgements.
The bad credit bonding is slightly more expensive due to the increased bonding risk. You can expect rates in the range of 5% to 10%. Since we foster close relations with numerous A-rated, T-listed surety companies, you are still guaranteed a top bond price with us.
What is the bonding process like?
Would you like to learn the nitty-gritty details of how bonding works? Don’t miss out our in-depth How to Get Bonded page.
We are here to help. If you have further questions or need assistance with your application, just contact us at (877) 514-5146.