Arizona Service Company Bond

To sell specific service contracts in the state of Arizona, you must register for a permit with the Arizona Department of Insurance and Financial Institutions (DIFI). Types of service contracts that require registration include warranties for:

• Home Systems (HVAC, Home Appliances, Pool Pumps, Water Heater)
• Consumer Products (Individual Products)
• Motor Vehicles (Autos, Boats, RVs, ATVs, etc.)
• Utility Line (Water, Sewer, Gas, Electric, Cable)
• Ancillary Vehicle Services (Paintless Dent Removal, Windshield Repair, Tire and Wheel Repair)

A selling permit is not needed for warranties issued by manufacturers, builders, or sellers of the actual item.

To qualify for registration to offer these service contracts, a business or individual must meet certain requirements. This includes having a $100,000 Arizona Service Company Bond.

An Arizona Service Company Bond ensures that a service and warranty company upholds their contractual obligations. In the event that they conduct business unlawfully or unethically, the affected policyholder can make a claim against the bond for reimbursement.

This surety bond is a contract between three parties:

1. Principal – the service company that needs to get bonded.
2. Obligee – the organization requiring the bond (DIFI).
3. Surety – the surety company issuing and financially backing the bond (Ex. Lance Surety Bonds). They initially pay any bond claims, but the service company is required to pay them back.

One of our clients, Company A*, had a claim made against their Arizona Service Company Bond last year. Their policyholder filed a complaint with DIFI after Company A failed to provide services promised under the warranty within a reasonable time. This resulted in further damage to the policyholder’s home.

After an investigation, our client was found to be in violation of Title 20 of the Arizona Revised Statutes. We initially paid the $20,000 bond claim and then set up a payment plan for Company A to reimburse us.

*Name changed for privacy.

This surety bond is in place to protect policyholders and their financial well-being. It ensures that service companies are financially liable if they fail to conduct business per the state laws and regulations outlined in Title 20, Chapter 4, Article 11 of the Arizona Revised Statutes.

• This bond is a form of trust deposit. Other trust deposits accepted include a mechanical reimbursement (contractual liability) insurance policy or a marketable security. Most opt for bonding as it tends to be cheaper and ties up fewer assets.

Any person who does not have a permit with a trust deposit that sells unapproved service contracts is guilty of a class 2 misdemeanor.

An Arizona Service Company Bond’s cost starts at $1,000. While the full amount of the bond needed is $100,000, you only pay a small percentage of that to get bonded.

• This surety bond’s cost, also known as a bond rate or bond premium, is determined by your credit score, business financials, and business experience.

Get a Free Bond Quote.

1. Fill Out a Bond Application

Fill out an online bond application or call us at 877-514-5146. Information you will need includes:

• Bond Name (Arizona Service Company Bond, also known as a Bond of Service Company)
• Bond Amount ($100,000)
• Contact Information
• Financial Statements and Warranty Contracts

Note that this bond must be issued by a surety company licensed to do business in Arizona. Lance Surety Bonds is licensed in all US states.

2. Receive Your Free Bond Quote

Check your email for your bond quote. After your application is sent, we will do a quick review and send a free bond quote to your inbox.

3. Get Your Service Company Bond

Follow the instructions in the email to pay for your bond online. We will send the original notarized Arizona Service Company Bond to the DIFI on your behalf upon request. An electronic copy will be sent to you as soon as your payment clears.

Your Service Company Bond will need to be renewed annually. We will notify you 1 – 2 months before your bond expires with instructions on how to renew your bond.

Bond claims are never ideal, but they do happen. We have bond claim specialists on staff who will investigate any bond claim made against you. This helps ensure that you aren’t paying for invalid claims.

If your bond claim is valid, we will pay initially and then set up a plan with you for repayment.

Valid Service Company Bond claims include:

• Failing to perform the services or repairs contracted promptly, competently, and workmanlike.
• Providing private client information to the public.
• Creating false or misleading statements in connection with the sale of a service contract.

How long does the bonding process take?

We can get most candidates bonded within 24 hours. We suggest using our online application form to make the process as quick as possible. Also, ensure that you have financial statements and a sample of your warranty contracts on hand.

Do I need this bond if I operate nationwide?

Yes. Regardless of your other areas of operation, you need a permit and a $100,000 Service Company Bond to conduct business in Arizona.

Can I obtain a bond with bad credit?

Yes, in many instances, you can get bonded with bad credit. At Lance Surety Bonds, we have a bad credit bonding program specifically for these cases. We consistently get applicants with poor credit the bond they need—even if other surety agencies have turned them down.

Note that while an Arizona Service Bond does factor in your credit to determine your bond rate, it also looks at your business experience, financial statements, and warranty contracts.

Get a Free Bond Quote.

Arizona Revised Statutes. (n.d.). In www.azleg.gov. Retrieved April 10, 2025, from
https://www.azleg.gov/arsDetail/?title=20

Bond of Service Company Form. (n.d.). Retrieved April 10, 2025, from
https://difi.az.gov/sites/default/files/documents/files/Form%20E-857%20Bond%20of%20Service%20Company%20Web.pdf

What is a Surety Bond? (n.d.). In Lance Surety Bonds. Retrieved April 10, 2025, from
https://www.lancesuretybonds.com/learn/what-is-a-surety-bond