What Is a Pennsylvania Health Club Bond?
If you’d like to operate a health club in Pennsylvania, you need to register with the state Public Protection Division at the Attorney General’s Office. In order to obtain your Pennsylvania health club registration, you will need to obtain a health club bond.
This bond aims to safeguard the interests of your clients and the general public. It is required in order to guarantee they will not suffer damages in case you go out of business, or engage in any unlawful activities. A bond claim can be made by harmed parties to seek a financial compensation.
Just like bonds in other states, your Pennsylvania surety bond is a three-party contractual agreement. The principal is your health club. The Office of the Attorney General is the obligee where you need to present the bond. The surety is the bond provider.
Questions about Health Club Bonds
Who needs to obtain this bond?
Anybody who wants to run a health club in Pennsylvania has to register with the Public Protection Division. This is how you get allowed to operate in the state. One of the requirements you have to meet is to post a surety bond. It ensures your compliance with the Pennsylvania Health Club Act. The bond amount you need to obtain depends on the length of the membership options that you present to your clients.
How much does the health club bond cost?
You need to obtain a $50,000 health club bond if you offer contracts lasting less than 12 months. In case your contracts are between 12 and 24 months, the bond amount should be $100,000. For contracts above 24 months, you’ll need a $200,000 bond.
The bond amount is what is required from you by the state authorities. It is not the same as your bond premium, which is your actual bond cost. It is often between 1% and 5% of the bond amount if your finances are in good shape.
|Surety bond name||Surety bond amount||Above 700||Between 650-699||Between 600-649||Below 599|
|For contracts below 12 months||$50,000||$375-$750||$500-$1,250||$1,250-$2,500||$2,500-$5,000|
|For contracts between 12 and 24 months||$100,000||$750-$1,500||$1,000-$$2,500||$2,500-$5,000||$5,000-$10,000|
|For contracts above 24 months||$200,000||$1,500-$3,000||$2,000-$5,000||$5,000-$10,000||$10,000-$20,000|
The precise surety bond cost that you have to cover depends on a number of factors. Your personal credit score and business finances, as well as assets and liquidity are in the spotlight. Your surety needs to examine them carefully in order to assess the bonding risk. The lower it is, the lower your bond premium is likely to be.
What if I have problematic finances?
For health club owners with low credit scores, tax liens, bankruptcies, or civil judgements, getting bonded can be tough. That’s why Lance Surety Bonds runs its Bad Credit Surety Bonds program.
The bad credit bond rates are in the range of 5% to 10%. They compensate for the increased bonding risk. As we collaborate with a number of A-rated, T-listed surety companies, we are still able to offer you a top bonding rate irrespectively of your credit score.
How do I apply for bonding?
Do you want to get more details about how bonding works? Here is our How to Get Bonded page which will provide you with a thorough overview.
Don’t hesitate to call us at (877) 514-5146. We can help out if you have questions about the bonding process and your application.
How are bond claims handled for health clubs?
Your health club bond protects your clients in case your business goes into bankruptcy, or if you fail to follow the contracts you have signed or the requirements you need to meet under the Health Club Act. An affected party can file a claim against your bond and thus seek reimbursement up to the penal sum of your bond.
On proven claims, your surety may first repay the claimant in order to ensure a fast compensation. You are liable to cover all costs, however. This means that bond claims can be quite problematic for your business, so it’s best to avoid them.