What Is a New York Health Club Bond?
Obtaining a surety bond is one of the requirements for starting your health club in the state of New York. This is how you can get licensed and operate legally.
Health club bonds protect your clients from losses, or potential misuse or fraud you may engage in. By making a claim, a harmed party can seek a financial compensation in such cases.
А surety bond is a contract between three entities. Your health club is the principal. The NYS Division of Licensing Services is the obligee to which you have to present the bond. Last but not least, the surety is the third party that provides the bond.
Frequently Asked Questions
Who has to get this bond?
If you want to start a health club in the state of New York, you need to get licensed with the Division of Licensing Services. As a part of the qualification criteria, you need to present a security instrument, which can be a surety bond, an irrevocable letter of credit, or a certificate of deposit. Surety bonds are usually the easiest way to meet this requirement.
You need to present the health club bond via the official bond form. The bond guarantees your compliance with Article 30 of the state’s General Business Law. The bond amount you have to post depends on the length of the service contracts that you offer, as well as on the number of locations you want to operate.
How much does bonding cost?
The bond amount for New York health clubs that offer contracts for less than 12 months is $50,000. If your contracts are between 12 and 24 months, the amount is $75,000. For contracts between 24 and 36 months, you need a $150,000 bond.
Additionally, your bond amount increases if you want to run more than 3 locations. For up to 4 locations, the bond amount increases with $50,000. For up to 6 locations, you need to add $100,000 to the amount. By posting an additional $150,000, you can operate up to 9 locations. If you want to run more than 10 locations, you have to add $200,000 to the basic bond requirement.
The bond amount you need to post is different from your bond premium. The typical rates for health clubs are between 1% and 5% for applicants with good finances.
|Surety bond name||Surety bond amount||Above 700||Between 650-699||Between 600-649||Below 599|
|Contracts for less than 12 months||$50,000||$375-$750||$500-$1,250||$1,250-$2,500||$2,500-$5,000|
|Contracts for 12 to 24 months||$75,000||$562.5-$1,125||$750-$1,875||$1,875-$3,750||$3,750-$7,500|
|Contracts for 24 to 36 months||$150,000||$1,125-$2,250||$1,500-$3,750||$3,750-$7,500||$7,500-$15,000|
Your surety bond cost is determined on the basis of a number of criteria. Your surety has to examine your personal credit score and business finances, as well as any assets and liquidity. This is how it can assess the level of risk involved with getting you bonded. Your bond price will be smaller if you can demonstrate a strong profile.
Can I get bonded with bad credit?
Applicants with low credit scores, tax liens, bankruptcies, or civil judgements can still get the bond they need with us. Lance Surety Bonds operates its Bad Credit Surety Bonds program exactly with them in mind.
The typical rates that you can expect are in the range of 5% to 10%, as the bonding risk is higher. You can still count on us to offer you a top rate. We work with a number of A-rated, T-listed surety companies, so we can shop around for the best option that fits you.
How do I apply?
Need more information about the way bonding works? Make sure to check out our How to Get Bonded page, which is an extensive resource on the topic.
If you have more questions or need help with your bond application, we’re here to help. Reach us at (877) 514-5146 and we will happily assist you.
What happens in case of a claim?
Unlike insurance for your business, your health club bond protects your clients. It can provide them with a reimbursement via a bond claim in case your health club goes bankrupt or if you fail to abide by the rules set in Article 30 of the New York State General Business Law.
Harmed parties can seek a total reimbursement up to the penal sum of your bond. When a claim is filed, it has to first be proven. If it is, your surety may first cover the claim costs. However, you have to fully repay it afterwards. This means bond claims can be a serious financial threat for your business. The best course of action is to stay away from such situations.