How do Renewals Work?
If you’re a surety bondholder, you need to understand that you’re not out of the woods yet. The truth of the matter is that bondholders will need to perform a few tasks regularly, in order to maintain the validity of their surety bond. One thing that many bonded people fail to grasp is the fact that surety bonds will not last forever. The good news is that the renewal process is fairly simplistic and shouldn’t give you a lot of trouble. Below, you’ll learn more, so you can be prepared to renew right on time.
Do Surety Bonds Expire?
If this is your first time, applying for a surety bond, you are probably not familiar with many of the aspects revolving around these financial instruments. One of the many questions that contractors will ponder on is whether or not the surety bond expires. Well, they do expire and oftentimes the date of implementation is also the expiration date. This basically means that the agreement will expire 365 days from the day that the bond was put into effect.
What Is A Surety Bond Renewal?
A surety bond renewal is basically, just an extension of the existing surety bond that is already placed with a reputable surety company. All security bonds are only valid for a specific amount of time and have to be renewed annually or sometime thereafter.
Unfortunately, before the renewal process can be completed, your company will have to undergo another evaluation. However, the good thing is that the principal will not have to sign another indemnity agreement and a new bond will not have to be issued. Instead, the existing bond can be extended for another given time period.
There are some cases in which the obligee may require a new bond, but this is not very common.
How Will You Know?
Some surety companies will make this process much easier on you. Others will require you to manage your own affairs. So, this will truly depend on the surety providers. However, you should know that there are some out there that will send you a notification in the mail. Others will do so through email. If you’re working with a provider, which forces you to do this on your own, you’ll want to put measures in place to remind yourself of the expiration date. This can be done fairly easily, by utilizing technology to your advantage.
Remember that surety bonds do expire and you will want to take action, before it is too late. Be prepared to renew your bond every year, as this is usually the duration.