Virginia Health Club Bond

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Who Is Required To Purchase a Health Club Surety Bond in Virginia?

The Virginia Department of Agriculture and Consumer Services is responsible for creating the licensing requirements for health clubs. The Department wants to make sure the health clubs they issue licenses to will serve the public honestly and provide the necessary services to the public and the state.

One of the requirements for getting a license is a surety bond if you'll be accepting payments or contracts for future services:

• This can include an initiation fee in excess of $250
• Accepting a year or more worth of money upfront of a given term of service
• Accepting pre-payment for service before a facility opens

If you have a health club facility that accepts money in advance of the location opening, you're required to hold all pre-paid funds in a bank account until at least 30 days after your facility has opened before you can use those funds.

If you have a surety bond or letter or credit, you do not have to meet this requirement. The bond takes its place.

What is the Difference Between a Surety Bond and Letter of Credit?

A surety bond vs a letter of credit really comes down to the amount of money you have to initially invest or put down.

A surety bond is a type of insurance contract that requires a small premium to purchase. More on this below.

A letter of credit typically requires a high percentage or all of the required amount to be invested in a bank account and then tied up for the duration of your business operations.

This is why in most cases a surety bond is the better, far less expensive option.

What Are The Virginia Health Club Surety Bond Amounts?

The bond amount is the maximum level of financial compensation in the event a customer is cheated out of their money. More on this below.

The surety bond amount is set by the Department of Consumer Affairs and it's based on the number of contracts that are pre-paid as follows:

To calculate the number of contracts that are prepaid, you follow these rules:

• The total number of contracts with a term that exceeds 13 months are considered multiple contracts (the first 12 months is one contract, beyond that is counted as a separate contract)
• If less than 10% of the total health club contracts are prepaid these do not count towards the total
• Contracts that are paid on a monthly basis do not count as long as the initiation fee is less than $250
• Contracts with an initiation fee of more than $250 are counted towards prepare contracts

An important rule to remember is, no matter how many different facilities your business operates, each facility must have its own surety bond.

The final rule to keep in mind:

• The maximum amount of coverage (or deposit if using a letter or credit) is $300,000 at which point the bond will cover all business locations

Here's why this financial security or guarantee is required by the Department of Consumer Services.

Why is a Virginia Health Club Bond Required?

Like we mentioned above, the licensing process exists to find the businesses who have the highest chance of successfully running their business and servicing the public.

It's unfortunate, but every year there are facilities who will purposefully harm their customers to increase profits:

• Stealing from customer deposits
• Charging for fraudulent deposits
• Mismanaging prepaid fees or shutting down a facility before it opens

It's because of these fraudulent facilities that the Virginia Department of Agriculture and Consumer Services requires a surety bond or letter of credit to be purchased in order to have a license issued.

If a health club facility is found guilty of purposefully mismanaging custom funds, the customer and/or customers can make a claim against the surety bond for financial compensation.

And as we've mentioned already, the maximum amount of compensation that can be paid out is the amount of the bond, even if there are multiple claims against the bond.

How Much Does a Virginia Health Club Bond Cost?

Remember, when you purchase a surety bond, you only have to pay a small fraction of the bond amount.

This small price is determined by a rate quoted from a surety.

A surety is an insurance company that underwrites health club surety bonds. And to determine this rate, the surety will conduct their own analysis of an applicant using...

• The personal credit of the owner or owners
• Business industry and experience
• Prior bond claims if an owner has been bonded in the past

From these factors and any internal thresholds, they will quote a rate and this rate multiplied by the bond amount is the price you'll pay.

This process of determining a rate is your opportunity to save hundreds, maybe thousands of dollars (depending on your bond amount) when you purchase your surety bond.

How To Save Hundreds (Even Thousands) Of Dollars Purchasing Your Surety Bond

We are Surety Bonds Direct, a specialized surety agency. We work with a network of the most reputable, A-rated sureties so help our customers pay the lowest possible price.

We see this every day and even we don't understand how one surety can come back with a rate or 1% while another surety comes back with a 3% rate. But it happens everyday and this means a lot of money for you.

Here is some example pricing so you can see how wildly the pricing changes when the rates change.

Let's use the $50,000 bond for our price examples, an amount right in the middle of the range.

Notice how a 1% to 3% change in the rate can make a huge difference in the cost of the bond.

Get your exact pricing today. All you have to do is complete our online price quote request form and you'll be assigned a bond specialist to help you get pricing within a 24 hour period, often within a couple hours.

The best part is you don't have to purchase from us. We just want the chance to earn your business. So get your pricing by completing the form or you can call a bond specialist at 1-800-608-9950.

How Long Does The Virginia Health Club Surety Bond Last?

This health club surety bond has a bond term of 12 months from the bonds effective date.

The effective date is the "active" date your bond will take effect. You'll choose this date when you purchase your bond. Purchasing your bond is as easy as completing an online checkout form.

Just make sure your business name is the same on your bond as it is registered with the Virginia Secretary of State.

Once you pay for your bond, our bond issuance team will prepare your bond:

• On the correct bond form
• With the required signatures
• All the required seals
• And the power of attorney

This process typically only takes 1 business day to complete.

The Virginia Department of Agriculture and Consumer Services requires the original bond form to be filed with the rest of your paperwork. This means you'll have to allow an additional 3 to 4 days to get your bond through the mail.

This is a great reason to get your surety bond requirement done as long as you know your contract number.

After 12 months, you'll have to renew you

As your renewal date approaches, your bond specialist will contact you 30 to 45 days in advance to remind you the expiration date is approaching.

To renew your bond and keep it active, you only need to pay the renewal premium. It's a fast and easy process.

Health Club Bonds And Getting Your Virginia Business License/Registration

Getting your health club registered is not a lengthy process. It mainly consists of these steps:

• Complete the Application for Registration
• Ensure you have the an automated external defibrillator
• Pay the required fees that will be based on your projected contractor number
• Provide the required security deposit (surety bond is the best option) if required
• If you don't have to purchase a bond you have to provide the necessary disclosure
• Meet the required member contract requirements

Each year during your license renewal, you'll reassess your bond requirement and if you have to raise it, lower it, or get rid of it altogether, your bond specialist will help.