What is a warehouse bond?
A warehouse bond (also called a warehouseman bond) is a license and permit surety bond that provides financial protection for anyone storing goods in a warehouse or storage facility. The storage facility must obtain the bond to guarantee protection against losses due to breaks in the surety contract. Common reasons for claims include theft, water damage, fire, climate control issues, and insufficient warehouse maintenance.
What is a warehouse or warehouse operator?
Warehouses are facilities that store manufactured goods and other items before they’re distributed to sell. Warehouse operators are held to high standards regarding the storage of goods and health and environmental regulations. A warehouse operator may also go by other names, such as warehouseman, warehouse assistant, or storeman.Get Your Warehouse Bond:
Quick Takeaways
- A warehouse bond is a license and permit bond providing financial protection for anyone storing goods in a warehouse or storage facility.
- States often require warehouse facilities to obtain warehouse bonds as part of the licensing process.
- Warehouse bonds protect consumers if their goods are damaged or stolen while being stored. They also safeguard facility operators against potential lawsuits.
- When setting the bond amount, your state authority may consider the size of your operation and the value of goods you store.
Who needs a warehouse bond?
State governing authorities often require warehouse facilities to obtain warehouse bonds. The bonds hold warehouse operators accountable and ensure they operate their businesses legally and ethically. Warehouse bonds protect consumers if their goods are damaged or stolen while being stored. They also act as safeguards against costly lawsuits for facility operators. Check with your state governing agency to learn if this bonding requirement applies to you. The types of goods you store may play a role in determining if you need this bond. You can also call ZipBonds at (888) 435-4191 for help with any part of the bonding process. The following states may require this bond:
- New York
- Wisconsin
- Georgia
- South Dakota
- Massachusetts
- Alabama
How do warehouse bonds work?
Like other license and permit bonds, warehouse bonds are three-party contracts involving a surety, an obligee, and a principal.
- Principal: The bonded warehouse operator
- Obligee: The state governing authority that requires the bond and provides a business license to the warehouse operator
- Surety: The bond underwriter that guarantees financial compensation in the case of claims
Bond Claims
If a bonded storage facility fails to comply with the terms of its bond agreement, any party that experiences damages can file a claim on the bond. For example, the warehouse may be responsible for covering claims arising from property theft. If an individual’s goods are stolen, the individual can file a claim to be reimbursed for their losses.Renewing Your Warehouse Bond
Warehouse bonds are typically good for one-year terms and then must be renewed. Many states require these bonds as part of the state licensing process for warehouse operators. The bond ensures the storage facility complies with state laws and regulations regarding storing and handling goods for customers.How much does a warehouse bond cost?
Warehouse bond costs can vary by state. When setting the bond amount, your state authority may consider the size of your operation and the value of goods your facilities store. You will pay a small percentage of your bond requirement (penal sum). Some states may weigh your credit score and business financials when setting your annual premium rate. In some states, the bond penal sum could range from $5,000 to $10,000. Other states set bond amounts on a case-by-case basis, factoring in the collective value of stored goods in each warehouse location. Expect to pay around 1-5% of the penal sum if you have good credit. If you have poor credit, you could pay more – possibly up to 10%. For example, if you live in a state that requires a $10,000 bond for each warehouse location and your rate is 1%, you’d pay $100 annually per warehouse.
Get Your Warehouse Bond
To get a warehouse bond in your state, call us at (888) 435-4191 to get bonded as quickly as possible. You can also start the application process below and reach out to us if you need help along the way. You’ll complete a simple application online, submit a warehouse liability form, and then print and sign your bond to send to your obligee.
About ZipBonds.com
Founders Ryan Swalve and Zach Mefferd formed the vision for ZipBonds.com when they realized how overly complicated it was to help clients place surety. The frustration of being unable to incorporate the technology they’d used in other insurance-focused projects left them thinking “there has to be a better way.”
Fast forward a couple of years, and that better way is the impetus of everything we do at ZipBonds. We constantly look for innovative ways to improve the bonding process for our clients and agents. Our team comprises individuals who understand all angles of surety – for companies, agencies, and individuals. Incorporating everyone’s point of view to improve the process while simultaneously integrating cutting-edge technology is what sets our business apart.