Everything You Need to Know About Surety Bonds for Professional Licenses

If you’re applying for a professional license, you may need a surety bond. But what exactly is it, why do you need one, and how much does it cost?

A surety bond is required by many states for professions like accountants, contractors, insurance agents, car dealers, and even hairdressers. The purpose is to protect consumers if a licensed professional causes harm or fails to fulfill obligations. For example, if an accountant embezzles funds, the bond helps cover damages to the client.

Typically, bonds cost about 1% of the bond value (e.g., a $50,000 bond might cost you around $500). However, your credit score can affect the price—lower scores may lead to higher premiums.

Alternatives to surety bonds include using a bank account as collateral, but it may tie up funds for the bond’s duration.

Ensure you're covered with both a bond and liability insurance. It’s a common standard for reputable businesses to be licensed, bonded, and insured.

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