Most states in the US let you replace surety bonds. In fact, 32 states allow drivers to use a surety bond instead of buying car insurance. Many car owners are surprised that some states don’t require car insurance if they have a surety bond. So, if you have a surety bond, then you may not need to get car insurance.
What Exactly Is A Surety Bond?
This is a lawfully binding contract between different parties.
- The principal (the individual that is requesting the bond).
- And the obligee (the individual that is requiring the bond).
- The surety company (the organization securing the terms of the contract).
This contract ensures everyone involved meets specific obligations. If the person who initially gets a surety bond cannot meet their financial obligations, the surety company will pay the amount of the bond on their behalf.
How Does A Surety Bond Work?
A surety bond is an excellent alternative to car insurance, but it works differently. With a surety bond, the at-fault individual is ultimately responsible for damages.
The surety pays the damaged party in advance, but the bond owner does not transfer any risk to the surety company. Meanwhile, the bond owner repays the whole amount to the surety company over time. Therefore, the surety bond is more like a line of credit. Only those with good credit can qualify for a surety bond.
How To Purchase A Surety Bond
You can purchase a surety bond from an approved surety agency in your state. Search for surety bonds in your local area to find a provider near you.