Public Official Bond

Public official bonds help ensure that government officials are held accountable for their actions while in office. By requiring public officials to obtain these bonds, governments can provide a financial incentive for officials to act ethically and responsibly. If an official engages in fraudulent or unethical behavior, the bond can be used to reimburse the public for any financial losses incurred as a result.

These bonds work by guaranteeing that if the official covered by the bond engages in fraudulent or unethical behavior, the bond will cover any financial losses resulting from that behavior. 

The three parties in a public official surety bond agreement are as follows:

• Surety: The insurance company that issues and backs the bond
• Obligee: The government agency that requires the bond
• Principal: The public official (PO)

If a claim is made against the bond, the surety company that issued the bond will investigate the claim and determine whether it’s valid. If it is, the surety will pay out the claim amount up to the bond’s limit. Then the public official must pay them back in full. Claimants may include the government or the public – whichever party suffered because the PO breached their bond contract.

The cost of this bond can vary depending on several factors, including the official’s position, the amount of the bond, and the official’s credit history. Generally, the cost of a public official bond can range from 0.5% to 2% of the bond amount per year for applicants with excellent credit.

For example, a $5,000 bond might cost around $100 to $200 per year, while a bond of $100,000 or more might cost several thousand dollars per year. Officials with poor credit histories may be required to pay a higher premium to obtain a bond, as the surety company may view them as a higher risk.