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What is a Public Official Bond?

Public official bonds are a subset of the broader surety bond category that must be filed with
the government agency (city, county, or state) for which the public official is appointed or
elected as a condition prior to taking office for most public officials (ie judges, sheriffs,
treasurers, constables, etc). Public officials with access to public money are most often
required to post a bond.

Public official bonds must be issued by

insurance carriers admitted in the state where the government agency requiring the bond
resides. The insurance carrier issuing any surety bond, such as a public official bond, will
also be referred to as the “surety company” or the “bond company”. Public official bonds
refer to the appointed individual as the Principal, the surety bond company as the Obligor
and the government agency as the Obligee.

Why is a Public Official Bond required?

Public officials are required to purchase bonds by state and local statutes to protect a
government agency by transferring to a surety bond company the cost of ensuring the public
is compensated for damages resulting from an official breaking local or state statutes and
regulations surrounding the duties of each office. The surety company provides the
government a guarantee (the surety bond) that the government agency will receive payment
for financial damages due to a violation of the statutes and regulations pertaining to the
official’s appointment up to a limit specified in the bond (“penal sum” or “bond amount”). The
bond company also directly receives claims from the public and determines the validity of
claims. Ultimately, public officials are responsible for their actions and required by law to
reimburse the surety company for any payments made under the bond or face revocation of
their office.

Public official bond violations triggering a bond payout may include an official failing to
collect taxes, fees, or other public funds, negligently inflicting personal injuries, or
misappropriating public funds.

How much does a Public Official Bond cost?

Public official bonds generally cost .5% of the bond limit with a minimum premium of
$100.00

Example: $10,000 Public Official Bond Cost

Credit Score Premium Rate Bond Cost

Not Required 0.5% $100

Is a Credit Check Required for Public Official Bonds?

Credit checks are not required for most public official bonds with bond amounts up to
$50,000; however, the surety insurance company ultimately determines how it will
underwrite and price a surety bond.

How does the wording in the bond form impact the cost of a Public Official Bond?
The bond form is a tri-party agreement which defines the rights and obligations of the
government agency (obligee), surety company (obligor) and public official (principal). While
many bond forms use similar language, each bond form can be customized by the
government agency requiring the specific bond and may contain provisions that increase
potential costs for the surety company, which will ultimately be passed on to the official via
higher bond premiums, stricter underwriting or collateral. The primary text to consider in a
public official bond surrounds (1) aggregate limits, (2) cancellation provisions and (3)
forfeiture clauses.

Aggregate Limits
Bond forms always specify the penal sum defined as the maximum amount of financial
damages any single party can recover from the bond related to a single claim occurrence.
Most bond forms also contain a clause which limits the amount of financial damages from all
parties and all claims to a specific amount (“aggregate limit”), usually the same amount as
the penal sum. For example, a $15,000 public official bond with an aggregate limit of
$15,000 will pay out no more than $15,000, regardless of the number of damaged parties or
claim occurrences. Public official bonds without an aggregate limit will be more expensive
than a bond with similar coverage containing an aggregate limit.
Cancellation Provisions
Most bonds contain a provision allowing for the surety company to cancel the bond
(“Cancellation Provision”) by providing a notice to the public official and government agency
requiring the bond with the cancellation taking effect within a set period of time, usually 30
days (“Cancellation Period”). Cancellation provisions allow the surety company to cancel the
bond for any reason, but most often due to the official failing to pay premiums due, claim
payouts, or material changes in the official’s credit score. Public official bonds with no
cancellation provision or cancellation periods greater than 30 days will be more expensive
than a bond with similar coverage containing a standard cancellation provision.

Forfeiture Clause
Surety bond claims are paid by surety companies to damaged parties to reimburse that
party for the financial loss incurred up to the bond penalty amount. Certain bonds contain a
clause which requires the surety company to pay the full bond penalty to the damaged party,
regardless of the actual damages incurred (“Forfeiture Clause”). Public official bonds with
forfeiture clauses will be more expensive than a bond with similar coverage that does not
contain the clause.

Where can I find more information on a specific Public Official Bond?

To find information on specific public official bonds, select the state and use our search
function to find any requirement across the country.

Select Your State to Find a Public Official Bond

• Alabama
• Arkansas
• Florida
• Indiana
• Massachusetts
• Michigan
• New York
• North Carolina
• Ohio
• Pennsylvania
• Rhode Island
• South Carolina
• Tennessee
• Texas
• Virginia
• West Virginia

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