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.
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 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.
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.
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:
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:
Talk to surety bond experts to help determine how much you have to pay for premiums.
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:
Here are some frequently asked questions related to bonds insurance in Michigan:
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.
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.
Michigan has three main types of surety bonds: court, contract, and commercial.
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.
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.