Surety Bond Rider
There is only one authorized means to make changes to or bring information up to date on a surety bond that is currently in force, and that is via the use of a bond rider.
Let’s imagine you’ve satisfied the requirements for your car dealer bond. The bond is only good for a period of one year. You are not required to pay for a new surety bond, but, if you determine that you need to update any information on the bond form, such as name, address, or ownership structure, before the bond’s expiry date, you may do so without incurring additional costs.
The first thing you need to do is contact the surety bond business that assisted you in becoming bonded so that they can provide you with a bond rider. You will be sent with a bond rider form by the bonding agency, which will allow you to update your surety bond with any new information.
In its most basic form, a surety bond rider may be thought of as an alteration or addition to the initial bond. When a bond has already been issued, the only option to correct errors is via the use of riders.
Keep in mind to always be extremely cautious about the information that you present on your surety bond so that you won’t be required to get a rider.
The following are examples of changes that call for a bond rider:
- Changes in the bond amount – for instance, if the obligee, the entity that is requesting the bond, made an error in calculating the punitive amount for a sales tax bond that is based on the reported sales income from the previous year, then the bond would be considered invalid.
- The principal’s legal name – this may be updated if the original spelling was incorrect or if the legal status of the individual changes due to marriage or divorce.
- The principal’s legal address – for instance, in the case of a relocation that took place after the bond was acquired.
- Bond maturity – as an example, extending the period from three years to five.
- Bond amount – for instance, if the obligee, the entity that is requesting the bond, made an error in calculating the punitive amount for a sales tax bond that is based on the reported sales income from the previous year, then the bond would be considered invalid.
In the event that you decide to make any of these adjustments while the bond is still active, you will be required to get a bond rider.
Even if the cause for the change may be something that is out of your control at times, it is still your obligation to request that the adjustment be made in the information pertaining to your bond.
For instance, if the total amount of your necessary bond is altered in any way, including but not limited to being raised or lowered, you are obliged to get a bond rider and amend your bond with the new amount prior to the mandated deadline.
Bond riders are required to be obtained if there is a need to modify an existing surety bond arrangement that has been purchased in the past and is still in place. The only method to modify the terms of the original surety bond arrangement without rendering it null and void is to pay additional money for a bond rider.
Getting the Services of a Bond Rider
An agreement for a surety bond is a contract that is legally enforceable and is made up of three parties: the obligee, the principal, and the corporation that is underwriting and issuing the bond (referred to as the surety).
You will need to send an application to the surety from where you obtained the bond in order to acquire a rider from them. The surety will proceed with the issuance of the rider if the modification request that you have made is one that can be met. The rider certificate may be sent to you so that you may provide it to the obligee, or it may be delivered directly to the obligee.
You were required to pay an annual premium in order to secure the surety bond. However, the rider that amends the bond will only cost you a modest one-time price, which is typically $25. Your individual credit score as well as the state of your finances are irrelevant to the discussion at hand in this instance. You are not entering into a new agreement; rather, you are paying a fee for an administrative service that will be provided to you.