Service Contract Bonds
Service Contract Bond requirements apply to businesses that sell, administer, or service repair or maintenance agreements on consumer products. These bonds help ensure compliance with state regulations and protect consumers if a service contract provider fails to meet its obligations.
Apply below, call our Commercial Department at 407-786-7770 or email us at [email protected]
Why You Need a Service Contract Bond
A Service Contract Bond is required to:
Comply with state licensing laws
Protect consumers from financial loss
Demonstrate financial responsibility
Maintain approval to sell service contracts
Avoid fines, penalties, or license suspension
Without an active bond, a service contract provider may be prohibited from operating legally.
Service Contract Bond FAQs
These are some of the most common questions asked about Service Contract Bonds and how they work.
A Service Contract Bond is a type of commercial surety bond required by many states for companies that offer service contracts, extended warranties, or maintenance agreements. The bond guarantees that the provider will operate in accordance with state laws and fulfill financial obligations to consumers.
If a service contract provider fails to perform covered services, misrepresents contract terms, or violates state regulations, a claim may be filed against the bond.
The cost of a Service Contract Bond is a small percentage of the total bond amount, typically ranging from 1% to 10% annually, depending on:
The bond amount required by the state
Business financials and history
Personal and business credit
Experience in the industry
For example, a $100,000 Service Contract Bond may cost as little as $1,000 per year for well-qualified applicants.
- Apply for the bond with a licensed surety company.
- Provide business information and financials for underwriting.
- The surety issues the bond naming the state as the obligee.
- The bond protects the state—if taxes aren’t paid, the state can file a claim.
- The business reimburses the surety for any valid claim paid.
Businesses that commonly need a Service Contract Bond include:
Service contract providers
Extended warranty companies
Vehicle service contract administrators
Appliance and electronics warranty providers
Third-party administrators managing service agreements
Bond requirements vary by state, and some states require both a bond and proof of financial responsibility.
Call us at 407-786-7770 or email us at [email protected]
What are Service Contract Bond requirements?
Service Contract Bond requirements vary by state but generally require providers to post a bond guaranteeing compliance with consumer protection laws and financial obligations.
Are Service Contract Bonds the same as insurance?
No. A bond protects consumers and the state, while insurance protects the business. Bond claims must be repaid by the provider.
What happens if a claim is filed?
If a valid claim is approved, the surety pays the claimant and the provider must reimburse the surety.
How long is a Service Contract Bond valid?
Most bonds are issued for a one-year term and must be renewed annually.