To get an indemnity bond, figure out which type of bond your situation requires, pull together identification and financial paperwork, and apply to a surety company that writes that class of bond. The surety underwrites your application, mostly on the strength of your credit, and issues the bond once you sign a General Agreement of Indemnity and pay the premium. For applicants with decent credit, the whole process runs from a few business days to a couple of weeks, and the premium typically lands between 1% and 3% of the bond’s face value.
Know What You’re Buying Before You Apply
An indemnity bond is a three-party arrangement. You (the principal) buy the bond to guarantee an obligation to a third party (the obligee). If you don’t meet the obligation, the obligee files a claim and the surety pays. Then the surety collects every dollar back from you. The bond protects the obligee, not you, and that shapes everything about how the application works: the surety is deciding whether it can recover from you if it ever has to pay a claim.
Step 1: Identify the Bond You Actually Need
The application, the documentation, and the cost all depend on which type of bond your situation calls for. A few of the common ones:
Lost Stock Certificates and Cashier’s Checks
Before a company reissues a lost stock certificate, it usually requires the owner to file an affidavit and buy an indemnity bond protecting the issuer and its transfer agent if the original ever resurfaces. Premiums typically run two to three percent of the missing certificates’ current market value.1Investor.gov. Lost or Stolen Stock Certificates Lost cashier’s checks work the same way: the bond gives the bank comfort that you, not the bank, will absorb the loss if the original gets cashed.2HelpWithMyBank.gov. Why Do I Need an Indemnity Bond to Replace a Lost Cashier’s Check
Probate Bonds
When a court appoints an executor or administrator, it often requires a bond to protect heirs and creditors from mismanagement. Size of the estate, family dynamics, and whether the executor is a relative all factor in. A bond isn’t always mandatory; if the will waives it, or all beneficiaries consent and the estate is straightforward, courts often accept a waiver petition.
Construction and Contractor Bonds
Federal law requires contractors on government construction projects worth more than $100,000 to post both a performance bond and a payment bond before the contract is awarded.3Office of the Law Revision Counsel. 40 USC 3131 – Bonds of Contractors of Public Buildings or Works State and local governments impose similar rules on their own public works. Contractor license bonds, required by many state licensing boards, guarantee compliance with local regulations and give consumers recourse against fraud or abandonment.
Title Indemnity Bonds
If a title search turns up an unresolved lien or a gap in the ownership chain, a title indemnity bond can let the transaction close by guaranteeing compensation if the defect later causes a loss.
Step 2: Gather Your Documents
Every surety wants the same core information, plus paperwork specific to your bond type. Expect to provide:
- Personal identification: driver’s license, state ID, or passport.
- Financial information: credit history is the single biggest factor in your premium. For larger bonds, the surety will want financial statements and documentation of assets.
- Bond-specific details. For a lost stock certificate: the certificate number, issue date, and current market value. For a lost cashier’s check: the exact amount. For construction bonds: the contract, project specifications, and your company’s financial statements. For a probate bond: the court order appointing you and the estate’s value.
The application form itself identifies you as the principal, names the obligee, describes the covered obligation, and sets the bond’s dollar amount. Fill it out completely the first time. Incomplete applications are the most common reason for delays.
Step 3: Find a Surety Company
Not every insurer writes surety bonds. You need a surety company or an insurance firm with a surety division. The U.S. Treasury’s Bureau of the Fiscal Service publishes Department Circular 570, a list of companies certified to write federal bonds.4Bureau of the Fiscal Service. Surety Bonds Every company on that list has cleared the Treasury’s financial standards, which makes it a useful starting point even if your bond isn’t federal.
For routine bonds like lost instrument bonds, independent surety agencies and online providers handle most of the market. Get quotes from more than one. Premiums for the same applicant and bond type can vary noticeably between companies.
Small Contractors: The SBA Surety Bond Guarantee Program
If your business can’t qualify for a construction bond on the open market, the SBA guarantees bid, performance, and payment bonds for small contractors on contracts up to $9 million for non-federal work and up to $14 million for federal contracts. The SBA charges 0.6% of the contract price for performance and payment bond guarantees, and nothing for bid bonds.5U.S. Small Business Administration. Surety Bonds You apply through an SBA-authorized surety agent rather than directly through the agency.
Step 4: Underwriting
Once you submit your application, the surety underwrites it. That’s a risk assessment: it reviews your credit, your finances, and the specifics of the obligation to decide whether to issue the bond and at what rate.
Lost instrument bonds and other simple bonds can clear underwriting in a few business days. Construction and larger commercial bonds involve a deeper look at your financial history, your track record on similar work, and sometimes your company’s structure. The surety may ask for additional documents along the way. Respond quickly. Delays on your end stretch out the timeline more than anything the surety does.
Step 5: Sign the Indemnity Agreement
Before the bond is issued, you sign a General Agreement of Indemnity. This is the document most applicants skim, and it’s the one that matters most if a claim ever gets paid. Under this agreement, you reimburse the surety for every dollar it pays out on a claim, plus legal fees, investigation costs, and related expenses. That obligation stands whether or not you agree the claim was valid.
If a business is the principal, every person who owns 10% or more of the company typically must sign individually. Personal assets are on the line, not just business assets. If the company can’t repay, the surety can pursue the individual owners for the full amount.
The mental model to carry into this signature: a surety is closer to a lender than an insurer. An insurer absorbs your losses in exchange for premiums. A surety fronts money to the obligee and then collects it back from you. The premium is a fee for the guarantee, not prepayment against future claims.
Step 6: Pay the Premium
The premium is a percentage of the bond’s face value. For applicants with good credit, most indemnity bonds fall between 1% and 3% of the bond amount. Weaker credit can push that to 4% or higher. On a $25,000 bond, a well-qualified applicant pays roughly $250 to $750.
Lost stock certificate bonds land near the low end, at two to three percent of the certificates’ current market value, and are often written as “open penalty” bonds, meaning the coverage amount adjusts if the stock’s value rises. Open penalty bonds generally require only a single premium payment rather than annual renewals.1Investor.gov. Lost or Stolen Stock Certificates
Construction bonds, probate bonds, and other obligation-specific bonds may require annual premiums for as long as the underlying obligation is open. The bond stays active until the risk it covers ends: the project is finished, the estate is closed, or the statute of limitations on the lost instrument expires.
Coverage begins once the premium is paid. Keep a copy of the bond and the indemnity agreement with your records.
If Your Application Is Denied
Poor credit is the most common reason for a denial, but one rejection doesn’t close every door. Some surety companies specialize in high-risk applicants and will write bonds at higher premium rates when standard-market sureties won’t. Posting collateral is another option: cash, real estate free of liens, or an irrevocable letter of credit equal to some or all of the bond amount can bring a surety around on an application it would otherwise decline.
A financially strong co-signer or indemnitor can also help. The co-signer shares your obligation under the indemnity agreement, which gives the surety more confidence it can recover on a claim. Small contractors who don’t yet have the financial track record to qualify on their own can turn to the SBA Surety Bond Guarantee Program for that reason.5U.S. Small Business Administration. Surety Bonds
Ask the surety exactly why it declined. Errors on a credit report can be corrected. Outstanding debts can be paid down before you reapply. Missing financial documentation is the simplest fix of all: provide what was requested and submit again.