New Mexico
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A New Mexico surety bond is an agreement between three parties: a principal, an obligee and a surety company, each of which serves a critical role in making the arrangement a workable one.
A bond works in a manner similar to insurance in that it serves as a risk transfer mechanism. The obligee in a bond arrangement does not wish to assume all the risk when hiring someone to do a job, and therefore transfers a portion of that risk to the surety company. The surety is obliged to pay out any claim made against the bond, in the amount specified and justified by the obligee, although subsequently the surety would pursue the principal to recover the entire amount of the claim which it paid out.
The principal, therefore, is motivated to live up to the specified terms of the agreement, because they must purchase the bond in the first place, and if any terms of the bond are not fulfilled and a claim is made, the principal would also be responsible for reimbursing the bonding company. As you can see, there is a certain balance to this model, with each of the three parties benefiting when a job is satisfactorily completed, and each of the three suffering some kind of setback if the reverse were to be true.
Common New Mexico Surety Bonds
A New Mexico surety bond is an agreement between three parties: a principal, an obligee and a surety company, each of which serves a critical role in making the arrangement a workable one.
A bond works in a manner similar to insurance in that it serves as a risk transfer mechanism. The obligee in a bond arrangement does not wish to assume all the risk when hiring someone to do a job, and therefore transfers a portion of that risk to the surety company. The surety is obliged to pay out any claim made against the bond, in the amount specified and justified by the obligee, although subsequently the surety would pursue the principal to recover the entire amount of the claim which it paid out.
The principal, therefore, is motivated to live up to the specified terms of the agreement, because they must purchase the bond in the first place, and if any terms of the bond are not fulfilled and a claim is made, the principal would also be responsible for reimbursing the bonding company. As you can see, there is a certain balance to this model, with each of the three parties benefiting when a job is satisfactorily completed, and each of the three suffering some kind of setback if the reverse were to be true.
Common New Mexico Surety Bonds
Contractors Bond
Auto Dealer Bond
Certificate of Title Bond
Public Adjuster Bond
Freight Broker (BMC-84) Bond
Collection Agency Bond
How do I purchase a New Mexico surety bond?
NFP, the nation's largest and most reliable surety company, is authorized to issue many different types of surety bonds in New Mexico. We can provide the best rates for your bond, as well as the fastest issuance, to get your business off and running.
Our short online application makes it easy. Click below to start the application process today.
New Mexico Surety Bond FAQs
In New Mexico, surety bonds are required for several professions and business types, including motor vehicle dealers, contractors, notaries, public adjusters, and collection agencies. These bonds help ensure compliance with state laws and protect the public from financial loss due to fraud or misconduct.
Auto dealers in New Mexico are required to carry a $50,000 surety bond. The premium of an auto dealer bond typically ranges from $500 to $1,500 annually, depending on the applicant's credit score and financial history. Motorcycle dealers are generally required to carry a smaller $12,500 bond.
Yes. Most licensed contractors in New Mexico must obtain a $10,000 contractor license bond. This bond ensures that contractors follow state construction laws and building codes. The cost is usually affordable, often around $100 per year for those with good credit.
Yes, even with poor credit, you can still obtain a surety bond in New Mexico. While premiums may be higher, ranging from 5 to 15% of the bond amount, many surety providers offer flexible programs for applicants with credit challenges.
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