• November 11, 2020

What You Need to Know About Renewing a Surety Bond

What You Need to Know About Renewing a Surety Bond

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Surety bonds generally don’t last forever. Many operate within a certain time frame, and a sort of “expiration date” can be attached to them. While the effect of the bond may expire after the bond’s term has come to an end, bonds can often be renewed in order to extend their coverage further. If you are looking to renew a surety bond for your business, conservatorship or guardianship, or any other case, there are many things you should know before starting the process. 

Is Your Bond Renewable?

The first thing you should do is find out if the bond that you have for your specific business or case is renewable. This should exist in the terms of your bond, but you can also contact the surety that is acting as the financial backer of the bond (or the surety agency you obtained the bond with) to find out if your bond is eligible for renewal. Keep in mind that your surety may even remind you months in advance of your bond’s expiration that it needs to be renewed. 

If you have a conservatorshipguardianship, or other types of fiduciary/court bond, you shouldn’t need to renew your bond. These are types of bonds that only the courts can change, cancel, or discharge. 

When to Renew a Bond

Ideally, you’ll want to renew the surety bond before its term ends. This will help eliminate the possibly of there being a lapse in coverage for your case. If you fail to renew a bond and a gap in coverage exists, you can run into issues with being paid out on claims and may even have to go through underwriting again. This is particularly true for license bonds, as they may have to be adjusted, rewritten, or changed. Thankfully, surety bonds can be renewed before the terms of the bond are up, so make it a point to begin the renewal process before the term on your surety bond expires. 

If you have a license bond, it’s important to know your renewal date. Failure to renew these types of bonds can result in a lapse of licensure with your state. 

The Process is Similar to When You First Applied for a Bond

To expedite the process, be prepared to turn over any information that the surety may require to complete the renewal of the bond. This information will likely be the same as what you initially turned over when you first applied for a bond. Working with a surety agency will help you understand what you need to renew your particular bond. 

This is why it’s important to begin the renewal process with plenty of time remaining in the bond’s term. You don’t want to run into a lapse in coverage because something was held during underwriting or elsewhere in the renewal process. 

What Happens if You Don’t Renew?

You will generally receive a notice of cancellation from the surety. This will notify you of the expiration of your surety bond and its terms as well as the termination of the surety’s obligation to pay out against any claims made against the bond after the term if up. You will no longer be covered by the bond and will need to reapply for a new bond immediately. 

Depending on the type of bond (guardianship, conservatorship, and other estate bonds), you may not have the luxury of not renewing a bond. These bonds are required by the courts until they say they are no longer needed. Notices are generally sent out if and when bonds need to be renewed, and they must be renewed until the court releases the fiduciary from his or her duties. 

Disclaimer: this is for informational purposes only and is not intended to be legal advice. If you need legal counsel, please contact an attorney directly.

 

Need to renew a surety bond? Get in touch with one of our agents today!