Public Official Bond

Public official bonds serve as a kind of guarantee that officials at various levels of government, and in specific positions, will remain in compliance with all regulations and government laws for the duration of their public service. While many governmental positions require public official surety bonds, the one area with the most need involves those with access to public funds.

Any public official who is required to purchase a bond will almost always need to have the bond in hand before being sworn in for duty, as it is usually a stated requirement for any governmental organization.

The types of governmental officials which are most often required to purchase public official bonds are the following: agents who sell fishing and hunting licenses, court clerks, treasurers, town managers, city managers, sheriffs, deputy sheriffs, clerks working for towns cities or counties, tax assessors and tax collectors, municipal judges, and judges at other levels of public service. All these positions involve an element of public trust, and for that reason, persons desiring to work in those offices are generally required by their employers to purchase bonds.

In a larger sense, it's not only the government agency that is being protected against non-compliance but the general public as well, since any misappropriation of funds or dereliction of duty directly impacts the local citizenry involved. If it should happen during the period of service of a public official that some kind of breach of the terms of the bond does occur, the government agency would then have the right to make a claim against the bond.

Assuming that this claim was to be upheld and it's found that the public official was indeed in breach of the bond's terms, the surety company would then be obliged to pay the amount of a claim made by the obligee, the government agency. Any amount up to the face value of the bond itself could be claimed by the government agency, and if necessary, a decision on the validity of that claim could be made in court, if it were not settled between the parties.

Whatever amount the surety company is obliged to pay to the obligee, it would then seek to recover from the principal, who is the civil servant in violation of the bond's terms. As a government official, you should do everything possible to avoid having a claim made against you, because not only would you be responsible for repaying the claim amount to the surety, but you would very likely find it more difficult to become bonded in the future.

There is another feature of the whole bonding picture regarding public officials, which is a bit unusual in normal contract terms. It is possible for the obligee to make a claim against an official even if the bond has expired, and the purpose of this is to ensure that officials are held accountable for their actions, whether or not the actual bond is still in effect.

While bonds generally cost between 1 and 5% of the face value of the bonding amount, any individuals with credit history issues can expect to pay a higher premium, assuming they are able to obtain bonding at all.

It should be remembered that whatever the cost of a public official surety bond is, it's not really the civil servant himself/herself who pays for it — it's almost always the state where a public position is being applied for. While this may sound odd, the state pays for the cost of the bond because it acts as a form of protection for the state if an official is found to be non-compliant with the terms of office. However, as mentioned above, if an official were found to be in breach of the terms of your bond, it would be the civil servant who ultimately repays the surety company, after the surety company has compensated the government agency. The role of the state, therefore, is simply to pay the initial cost of a surety bond but not to pay for any claims made against the principal.

The cost varies widely by state, and the cost is also strongly associated with the specific governmental position being applied for. One of the factors carrying the greatest weight for determining the cost of a bond is the personal credit history of the individual applicant. The reason for this is that personal credit history is one of the strongest indicators of how likely an individual is to be subject to a bond claim, and it's also an indicator of how well a person tends to manage funds.

It is often difficult for some individuals applying for public office to obtain the needed bonding when they have a very poor credit score. The reason for this is that public officials are often involved with public funds, and when a person has demonstrated a poor history of managing their personal funds, it does not bode well for skillful management of public resources. However, it is not altogether impossible for an individual to be bonded with a poor credit history.

Another major factor in determining the cost of a public official surety bond is the bond amount. After evaluating all the factors described above, a surety company will develop a premium cost that the principal would have to pay the surety in order to receive the appropriate bonding.