What Is a Surety Bond in Texas?

by Nicholas Pell

While sometimes considered a form of insurance, a surety bond is not quite the same. A surety bond ensures that a business or individual fulfills professional requirements. This might be the terms of a contract or the ethical regulations of a profession. Each state has its own rules and regulations for surety bonds, and Texas is no exception.

Types of Surety Bonds

Texas has a wide variety of surety bonds that fall into several broad categories. These include bail bonds, construction bonds and license and permit bonds. The first is to ensure court appearances from accused persons. The second ensures that construction contractors deliver the services promised in a contract. The last ensures that professionals working in a field adhere to professional and ethical expectations.

Getting Bonded

Bonds are offered through private companies in Texas. Some of these are insurance companies that also offer surety bonds. Others are companies that specialize in surety bonds. These companies can assist firms wondering what types of surety bonds are required to legally do business in the state. The Texas Department of Insurance keeps a list on its website of companies that offer surety bonding.

Surety Bonds by Industry

Types of bonds and requirements for being bonded vary by industry. Industries requiring surety bonds include health spas, automotive dealerships, telemarketers, collection agencies and general contractors. Texas-based businesses must apply to the state agency overseeing their trade for a bond. For example, auto dealers must apply to the Department of Transportation - Motor Vehicle Division while talent agencies must apply to the Texas Depertment of Licensing and Regulation.

Pricing

The price of a surety bond is a percentage of the amount of the bond. This is generally between 1 and 3 percent, depending on company credit and financials. The total amount necessary for bonding varies widely between industries. Employment agencies must buy a bond for $5,000 as of this writing, while the Taxable Fuel Bond Certification Bond is in the amount of $50,000.

About the Author

Nicholas Pell began writing professionally in 1995. His features on arts, culture, personal finance and technology have appeared in publications such as "LA Weekly," Salon and Business Insider. Pell holds a Bachelor of Arts in English from the University of Massachusetts at Amherst.

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