Alabama service contract provider bonds.
From $250.
Alabama registers service contract providers with the Commissioner of Insurance. One way to prove financial responsibility is a funded reserve plus a surety bond of at least $25,000, or 5% of aggregate provider fees less claims paid, whichever is greater. Premiums cost 1% of the bond amount.
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How much does an Alabama service contract provider bond cost?
1% of the bond amount, from $250 at the $25,000 minimum. Enter your amount in the calculator for the exact price.
Three steps. One sitting.
There is no underwriting queue for the standard service contract deposit — enter your amount, pay, and file it with your registration. Here is the whole thing:
Apply online
Provider details, the deposit amount your registration requires, and an effective date. That is the application — no financial statements to assemble, no reserve schedule to attach.
Pay & e-sign
Most applications approve and issue the moment you pay. No credit check up to $10,000.
File with the Department
Your executed bond and power of attorney arrive by email on the Department's Service Contract Provider Surety Bond form, ready to file with your initial registration or your annual renewal in Montgomery. Wet-ink original mailed on request.
What it is and who needs it.
What the service contract deposit actually guarantees
A service contract in Alabama is a separately priced agreement, for a specific duration, to repair, replace, or maintain property for operational or structural failure, defects, or normal wear — the extended warranty sold beside an appliance, a home systems plan, a windshield chip program, a key-fob replacement plan. Title 8, Chapter 32 excludes true manufacturer warranties, mechanical breakdown insurance, and ordinary maintenance agreements, and it states plainly that a service contract is not insurance. Anyone selling or offering to sell one in the state must register with the Commissioner of Insurance first and use the provider number the Department issues on every later filing.
Because the provider — not an insurer — owes the repairs, § 8-32-3(f) makes every provider prove it can pay for them. There are three routes, and a provider picks one on the application: insure all its contracts under a reimbursement insurance policy; maintain a funded reserve (reserves based on the provider's loss experience as certified by an actuary, or at the provider's election 30% of the aggregate provider fees on contracts sold and then in force) plus a financial security deposit in trust with the commissioner; or show a net worth or stockholders' equity of $100,000,000. This bond is the deposit in route two, and it is the route most independent providers take.
The deposit is a three-party promise: you (the principal), the surety carrier, and the State of Alabama, Commissioner of Insurance as obligee, with your Alabama contract holders as the protected parties. On the Department's own bond form the condition is that you comply with Alabama's applicable statutes and every Department rule, regulation, and order applicable to service contract providers; the surety's aggregate liability is capped at the penal sum, the bond is continuous in form, and the surety may cancel only thirty days after its notice is received at the Department. It is not insurance for you — if the surety pays a claim, you repay the surety, so keep the filing continuous and the reserve funded.
You need this bond if you are
Claims, renewal, filing, and what sets the price.
If a claim is made
A claim comes from the party the bond protects, the obligee named on the form, when the duty the bond guarantees is not met.
The surety investigates and pays a valid claim, up to the bond amount. You then repay the surety: a surety bond is a guarantee of your performance, not insurance for you.
Renewal and term
The premium covers a one-year term from the effective date you choose.
Renew before the expiry date to keep the bond in force: the license, permit or contract it backs expects continuous coverage.
How to file it
File with the Department. Your executed bond and power of attorney arrive by email on the Department's Service Contract Provider Surety Bond form, ready to file with your initial registration or your annual renewal in Montgomery. Wet-ink original mailed on request.
What sets the price
The premium is 1% of the bond amount, $100 minimum: the amount the obligee sets moves the price, not your business profile.
No credit check up to $10,000. Above that, the carrier may run a soft pull, which never affects your score.
Where a check runs, it decides approval; the rate is the same for everyone approved.
One application, issued instantly.
Enter the deposit amount your registration requires and an effective date. Most applications approve and issue the moment you pay.
Start the application →Common questions.
Other Alabama bonds.
Price and requirements checked on the carrier’s application, . Page updated .
Your provider registration is one filing away.
Enter the deposit amount your Department filing requires and see your exact price before you pay. Free until issued.