What You Need to Know About Surety Bond Renewals

Surety bonds are not one-size-fits-all. Whether you hold a license bond, permit bond, or something more specialized, understanding the different types of bond renewal structures can help you avoid confusion, stay compliant, and manage your renewals with confidence.

What Is a Surety Bond?

A surety bond is a three-party agreement that ensures the fulfillment of a commitment or contract. For example, the surety, Merchants Bonding Company™, may provide a bond to a construction company, which is the principal, to meet a requirement from a state agency or municipality, which is the obligee. The bond guarantees that the principal will perform as promised. If they do not, the surety assumes the risk. Unlike traditional insurance, if the surety pays a claim, the principal is obligated to reimburse the surety in full.

With that foundation in place, let’s take a look at how renewals work for different types of surety bonds.

Do All Surety Bonds Renew?

The short answer is no. Some surety bonds are term-specific, issued for a single project or obligation and expire at completion. Others are written on a renewable basis, typically required by state licensing agencies or municipalities, and must be renewed on an annual or multi-year cycle.

For example:

• License and permit bonds (like those for contractors or auto dealers) commonly renew each year.

• Court bonds and one-time construction bonds often do not renew, since they’re tied to a specific event or project.

It’s important to know what kind of bond you hold and whether it’s subject to renewal. Your insurance agent can help you confirm this and keep you informed of renewal dates and payment instructions.

The Four Types of Bond Renewals

Here is a breakdown of the most common renewal types.

1. Non-Renew Bond

This bond runs its term once and does not renew. It is typically used for one-time obligations, like certain court bonds or construction project bonds.

2. Continuous Bond

A continuous bond stays in effect as long as premiums are paid. No additional documents need to be filed with the obligee. The bond automatically continues from year to year, making it one of the simplest structures to manage.

3. Renewal Bond

Some obligees require a new bond document to be filed each time the bond renews. These are called renewal bonds. They do not automatically continue. If this applies to you, expect to receive a new bond for filing after each renewal period.

4. Continuation Certificate

Instead of issuing a brand-new bond, some obligees accept a continuation certificate. This document confirms the original bond will remain in force for another term. It is typically filed with the obligee annually.

Knowing which type you hold helps determine your renewal responsibilities in terms of payment and document submission.

How Often Do Bonds Renew?

Most renewable bonds follow a 12-month cycle. Some are written for multi-year terms. The renewal schedule depends on the bond type and the requirements of the obligee. Your insurance agent can help you keep track of key dates to ensure you do not miss a payment or filing deadline.

How Does the Bond Renewal Process Work?

Surety bonds are issued by Merchants through licensed insurance agents. When it is time to renew, either your agent or Merchants may send you a renewal invoice. This depends on your agent’s preference.

If you are paying Merchants directly, you can:

• Mail a check to the address listed on your invoice.
•  Or pay online using the custom URL included in your invoice. Didn't get an invoice or can't find your payment URL?

Once your payment is received, Merchants may send:

• A new bond, for renewal bond types

• A continuation certificate

• Other relevant documents, depending on your bond's renewal structure

What Happens After I Pay?

It will usually take about five business days from when we receive your payment for you to get your renewal documents. The effective date on your renewal certificate or bond will not be impacted by the processing time.

If your bond requires documents to be filed with the obligee, such as a new bond or continuation certificate, you will need to ensure those are submitted promptly. Failure to file can result in cancellation or non-compliance with the entity requiring the bond, such as a licensing agency or municipality.

Need Help with your Renewal?

Surety bonds are issued by Merchants Bonding Company through insurance agents. Contact your local insurance agent or use our Find an Agent tool. They will guide you through the process, informing you of what documents and information are needed by Merchants to underwrite your bond.

All information provided is subject to change.