In terms of surety bonds, a "renewal" refers to the process of extending the validity of the bond beyond its original term. Most surety bonds have a fixed term, typically one year, after which they expire. If the bonded obligation extends beyond the term of the bond, or if the parties involved want to continue their relationship under the protection of the bond, the bond needs to be renewed. This involves reassessment of the risk by the surety company, possible adjustment of premium based on the risk assessment or changes in the bond amount, and issuance of a continuation certificate or a new bond to replace the old one.
Not every bond needs to be renewed; for instance, motor vehicle certificate of title bonds are single-term bonds. However, the renewal process ensures that the bond remains in effect for the duration of the obligation it guarantees. It's important for the principal to initiate the renewal process well before the bond's expiration to ensure continuous coverage and compliance with the terms of the agreement or statutory requirements. Failure to renew a bond on time can result in loss of license or ability to legally operate, fulfill contracts, or perform work that requires bonding.
A bond term is the length of time a surety bond is effective. A surety bond could have a term of anywhere from four months to one year, two years, or five years, etc. The start of the term, or the effective date, typically depends on when you apply for and purchase your bond. Some bonds, however, may have pre-determined term dates.
Yes, we will notify you at least 30 to 60 days before your bond is up for renewal. If your contact information is up to date, we will email you with a quote for your renewal, and we may also follow up by phone as your renewal date approaches.
If you fail to renew your bond before it expires, the surety company may cancel your bond due to nonpayment. This means that the bond will no longer be in effect until you reinstate it (if the surety allows) or purchase a new bond.
Failing to hold an active bond may result in loss of license or ability to legally operate, fulfill contracts, or perform work that requires bonding.
If you fail to renew your bond on time and the surety company cancels it, you may be able to reinstate your bond for a fee. A reinstatement will backdate your bond to the expiration date and cover the period when the bond was cancelled, and "coverage" lapsed. Whether you qualify for a reinstatement is entirely up to the surety that issues your bond.
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