Alabama Land Disturbing Bond

Businesses are required to file a bond with the State of Alabama Storm Water Management Authority (the "Obligee") to activate their license. The bond protects the Obligee by transferring to a surety bond company the cost of ensuring the public is compensated for damages resulting from a licensed business breaking licensing laws.

Land Disturbing Bond

State/Jurisdiction:
Classification:

How much does the Alabama Land Disturbing bond cost?

Alabama Land Disturbing bonds typically cost between 0.8% and 5.0% of the bond amount depending on the personal credit, license history, and experience of the business owners and the surety carrier issuing the bond.

Credit Premium Rate
0.75%
1.00%
1.25%
2.00%
2.50%
3.00%
4.00%
5.00%

Is a Credit Check Required for Alabama Land Disturbing Bonds?

Surety carriers will run a credit report as part of underwriting the bond because the business ultimately must reimburse the surety bond company for any claims made on the bond.

Why is the Alabama Land Disturbing bond required?

Businesses are required to purchase and file a bond with the State of Alabama Storm Water Management Authority to activate their license. The bond protects the Obligee by transferring to a surety bond company the cost of ensuring the public is compensated for damages resulting from the failure of a licensed business complying with the provisions of licensing laws.

How does the Alabama Land Disturbing bond work?

Alabama Land Disturbing bonds must be issued by an insurance carrier admitted by the Alabama Department of Insurance. The insurance company issuing any surety bond, such as the Alabama Land Disturbing bond, will also be referred to as the "surety company" or the "bond company". The business is referred to as the Principal, the surety bond company as the Obligor and the State of Alabama Storm Water Management Authority as the Obligee.

The surety company provides the Obligee a guarantee (the surety bond) that the customers, vendors and employees of a licensed business will receive payment for financial damages due to a violation of licensing law up the bond amount stated on the bond form ("penal sum"). The bond company also directly receives claims from the public and determines the validity of claims. Ultimately, the licensed business owners are responsible for their actions and required by law to reimburse the surety company for any payments made under the bond or face indefinite license suspension.