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    Michigan Bonds Insurance

    Michigan's entrepreneurial spirit remains strong. There are over 902,000 small businesses that employ at least 1.9 million workers. Given the increasing momentum, the governor presented a $2.1 billion proposal to support these small businesses further, encourage more residents to start and grow local businesses, and solidify economic prosperity across the state.

    However, although state-backed programs are in place, Michigan businesses should still consider securing surety and miscellaneous bonds. The coverage could prove invaluable in certain situations. Many are already headed in the right direction, considering how surety bond companies issued more bonds insurance in 2021 than the year before. The total issuance by insurance companies in the U.S. in 2021 reached a whopping $480.03 billion.

    Refinitiv data shows insurance transactions reached a total of $37.522 billion in 2021, up from the recorded $34.428 billion in 2020. Pandemic-related credit concerns were the main driving force behind the increased demand. Regardless of the reason for securing them, the coverage provided by such bonds contributes to business stability.

    Michigan businesses are encouraged to get a bonds insurance policy with competitive rates. This would allow you to get sufficient coverage at a relatively lower cost than other insurance and financial services options. Learn more about the different bond types and costs below.

    Types of Bond Insurance In Michigan

    Insurance-and-Coverages

    Depending on the intent, you must determine the right kind of surety bond before obtaining one. These are the three main types of Michigan surety bonds:

    Court Surety Bonds

    Court bonds are a type of Michigan surety bond that minimizes the risk of financial damages for an individual pursuing legal action. It also helps ensure the proper completion of court-appoint responsibilities. There are two main types of court bonds: judicial and probate bonds.

    • Judicial bonds: These help limit the financial losses associated with a judicial ruling, making them more risk-averse than other surety bonds. This includes appeal bonds and bail bonds.
    • Fiduciary or probate bonds: These are required for individuals handling or managing another party's assets. Custodian bonds, guardianship bonds, and executor bonds are some other examples.

    Contract Surety Bonds

    As the name implies, contract bonds help ensure that any contract meets its legal terms. This type of bond also compensates the obligee if the contract defaults.

    Contract bonds are most commonly used in the construction industry. According to the Miller Act, contractors must have a contract bond for projects exceeding $100,000. Contract surety bonds might be required for project contracts that cost lower than that.

    The most common types of contract bonds include bid, performance, and payment bonds.

    Commercial Surety Bonds

    This type of bond helps regulate professional industries. It helps prevent fraud and harmful business practices. The most common types of commercial bonds are license and permit bonds.

    Other types of commercial surety bonds include:

    • Sales tax bond
    • Auto dealer bond
    • Business services bond

    Bond Insurance Cost In Michigan

    The cost of a surety bond in Michigan ultimately depends on the type of bond you plan to obtain. The total cost of court, contract, and commercial bonds may vary. Some are fixed amounts, while others are individually determined based on state regulations.

    Remember that the surety bond cost and the total amount are different. The cost or premium is what you pay for; it's only a fraction of the total bond amount.

    Your payment for the premium will depend on various factors, including your credit score. It is likely that a high credit score will result in a lower premium rate. The standard market rates range between 1% to 4% of the total bond amount. It may go up to 15%.

    These are other factors that help determine the total surety bond cost:

    • Personal or business financial statements
    • How long has your business been operating
    • How well your business is doing and other projections

    Talk to surety bond experts to help determine how much you have to pay for premiums.

    Quick Statistics On Michigan Bond Insurance And Surety

    The State of Michigan is dedicated to putting small businesses first. This is why surety bond insurance and financial services are seeing more activity from small businesses. 

    Here are data and statistics that are relevant to those who plan to open a business, expand their insurance coverage, and secure their bonds in Michigan:

    • Michigan has 902,000 small businesses, making up 99.6% of all businesses in the state.
    • Michigan small businesses employ 1.9 million people or 48.3% of all workers in the state.
    • 150,000 Michiganders applied to start a small business in 2021. That's 59% more than 2019.
    • $500 million has been allotted to the Michigan Mainstreet Initiatives, which aims to attract the establishment of startups like restaurants and microenterprises.
    • $400 million has been allotted to the Growing MI Business Grant Program.
    • Bond insurance transactions rose from $34.428 billion in 2020 to $37.522 billion in 2021.
    • The price of bond insurance increased by 9% in 2021 due to rising market demand.
    • 60% of Americans are insufficiently ready for rising climate threats. In line with this, bond insurance is included in the long-term planning of more businesses.

    Frequently Asked Questions About Bonds Insurance

    Here are some frequently asked questions related to bonds insurance in Michigan:

    How can my Michigan business get bonded and insured?

    The process is relatively simple as long as you have all the required documents and resources. You can secure a surety bond from a local insurance agent or a surety bond company. Many companies allow online applications.

    How much does it cost to get bonded in Michigan?

    The cost of surety bonds in Michigan typically ranges from 1% to 15% of the required bond amount. However, it largely depends on what the surety bond is for — license bonds, contractor bonds, and court bonds may cost differently. Some bond amounts are fixed; others are determined on a case-to-case basis under the guidance of state regulations.

    What are the different types of bond insurance in Michigan?

    Michigan has three main types of surety bonds: court, contract, and commercial.

    • A court bond might be required by appellate and probate courts.
    • Much like a contractor license, contract bonds are required before a business can start accepting public and private construction projects.
    • Commercial bonds are generally required in the licensing process of professionals such as car dealers, mortgage brokers, and real estate agents.

    How much does a $10,000 surety bond cost in Michigan?

    To become a Michigan notary public, you can get a $10,000 surety bond with the county clerk through an insurance agency or bonding company. There is a $10 nonrefundable fee.; it might be higher if you're filing it at a charter county with a population of at least 2 million.

    The cost of other types of surety bonds will vary depending on what the bond is for.

    Other Insurance Types

    Michigan surety bond insurance isn't the only type of insurance you can get. It's also important to explore other options to discover policies that cover all your bases:

    Bonds insurance remains in demand among small businesses as well as large enterprises. But never settle for the first quote that you receive. In addition to the bond amount and primary and interest rates, you want to make sure you get comprehensive coverage that secures your business's future. 

    Review your options so you can secure smart long-term business solutions. Read through our blogs at Assured Standard for information about surety bonds and bond insurance policies.

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