The Virginia Department of Health has a mandated that a $50,000 bond be posted by all contractors doing business with Home Care Organizations. This bond is to be posted in addition to the HCO’s liability insurance, with the primary objective of providing protection for patients or individuals that have suffered injury caused by negligent or criminal acts of an HCO’s contract personnel. The bond serves to guarantee to the HCO that the bonded contract will fulfill their contractual obligations, and that the contractor will be liable for any criminal or negligent acts that harm patients.
The Home Care Organization actually serves as the obligee, requiring its contractors to post the bond. The HCO can either help pay the bond premium, by having the costs worked into their contract, or can leave it up to the contractor to take care of.
Since this is a very new requirement, many surety companies are not yet willing to write it, as no information exists regarding claims and loss ratios. However, Lance Surety Bond Associates, Inc. has been proactive in working closely with some of our top sureties to develop aggressive programs for this bond type. If you’re a contractor working with an HCO, and are being required to post this bond, apply on our website for a free quote.
This requires contractors who are performing on construction contacts to have to subcontract any construction work outside the scope of its license to properly licensed construction contractors. They are also required to post a minimum of a $15,000 surety bond. Under current law a license bond based on the type of work and volume of the business is required. This pertains to the landscape contractor performs in an amount ranging from $3,000 to $15,000. This new bill would then require a new bond amount for landscape contractors performing on contractors outside the scope of their license.
License Bond – Towing Companies
The purpose of SB 570 would be to repeal the bond requirement for towing companies that tow vehicles from parking lots. Under current law a $20,000 bond must be posted to guarantee the payment of any liability incurred under the law.
HB 247: License Bond – Radon Mitigation Professionals
Under this bill radon mitigation professionals and radon measurement professionals will be regulated. These professionals will have to be certified and be able to post a $10,000 License and Permit Surety Bond. This bond will be conditioned on compliance with the proposed law and any rules adopted to implement it. In order for this bond to be in compliance it will have to be issued by a corporate surety that is authorized to transact surety business within the Commonwealth. The surety’s liability with the principal will be limited to the penal sum of the bond, and the bill provides for cancellation by the surety with advance written notice. The SFAA was contacted during the drafting of this bill and assisted in writing it.
SB 87/HB 159: License Bond – Currency Exchanges
This will increase the amount of the license bond for community currency exchanges from 10K to 50K. This provides services for cashing checks, drafts, money orders or any other acceptable evidences of money. The Director of Financial Institutions is permitted to require a larger bond amount. This cannot exceed the exchanges outstanding liabilities. This bond secures any liability the exchange inherited on any money orders, and for any sums due for unpaid checks, draft or money orders left with the exchange for collection, and for any liability incurred in connection with the services permitted under current law. This new bill will clarify this to include the payment of any penalties and fees incurred by the remitter in the case that a money order is returned unpaid. Under current law an exchange is permitted to provide a blanket bond for all licensees belonging to a statewide association of exchanges. This bill will increase the required amount of the blanket bond from $2 million to $10 million.
There are numerous types of surety bonds that fall under the license and permit bond category, and they can come with a wide variety of guarantees. Below is a list of the primary classifications for guarantees that accompany different types of license and permit bonds.
Compliance-only Bonds: These types of surety bonds guarantee that principals will be in compliance with all pertinent laws for a specific activity or business.
Compliance bonds with third-party liability: Similar to compliance-only bonds, these types of license and permit bonds guarantee that the principal will comply with the laws pertaining to the activity they are licensed for. However, they also come with a guarantee that the surety will pay damages to any third-party group or individual that happens to suffer from any losses incurred due to non-compliance by the principal.
Forfeiture Bonds: When dealing with this classification of license and permit bond, a surety must forfeit the entire amount of the surety bond in the unfortunate event that the principal does not complete a project per the terms of the contract, or is otherwise found to be non-compliant. What makes this different from many other guarantees, is that instead of simply paying for damages incurred as a result of a contract violation the surety must forfeit the entire amount of the surety bond. This is common for license and permit bonds that come with a financial guarantee.
Tax or Fee Bonds: This type of license and permit bond guarantees that the principal will both properly account for and remit taxes and fees collected through the their business operations. Common examples are liquor tax bonds, fuel tax bonds, and sales tax bonds.
Merchandising and Dealer Bonds: Simply put, this classification of license and permit bond guarantees that a principal partaking in merchandising activities will comply with all applicable laws and regulations. Essentially, they act to deter fraudulent practices or misrepresentation by a principal, and provide the necessary protection for the public. A common example would be an auto dealer bond, which protects the public from fraudulent practices by a motor vehicle dealer.
Reclamation and Environmental Protection Bonds: These types of surety bonds guarantee that any land altered or damaged during the course of business operations by a principal will be fully restored to its original state upon completion of work. Details on what specific restoration must take place should be included in the permit filing, and often times can include actions such as planting grass seed, replacing topsoil, etc. In regards to the environmental protection guarantee, principals must promptly clean up any spillage or runoff that could unintentionally pollute local land or water in the vicinity of the principals operation.
For more information, see our section on License and Permit Bonds.
As of July 1, 2009, HB 1359 established an increase in the license bond amount required for all exterminators of termites and structural pests operating in the state of Arkansas. The license bond amount doubled from $50,000 to $100,000.
This license and permit bond guarantees that all exterminators will comply with the rules and regulations outlines via their state license.
Alabama SB 249, which was enacted on May 21, 2009, created a licensing requirement for all mortgage loan originators, as well as a requirement for them to be covered by a surety bond. However, the law does allow mortgage loan originators to use the surety bond of someone whom they are an employee or an exclusive agent of, as long as that person is subject to the Mortgage Brokers License Act (SB 232) or the Alabama Consumer Credit Act (SB 234). This license bond needs to provide ample coverage for each mortgage loan originator in an amount equal to the amount of the originated loans.
This new law became effective in Alabama on June 1, 2009, but the licensing requirements will not go effective until June 1 of this current year.
Enacted on May 13, 2009, Alabama House Bill (HB) 184 increased the bond amount that can be required by the State Board of Heating and Air Conditioning Contractors of certified heating and air conditioning contractors in the state. The amount that the State Board can require went up from $10,000 to $15,000.
Similar to last year, the Surety and Fidelity Association of American (SFAA) noticed a trend of amended state bills that change specific requirements pertaining to motor vehicle bonds (type of commercial bond also referred to as “auto dealer bonds”). These new bills are either requiring an increase in the motor vehicle bond amount, or an extension of its application to include additional vehicle types as well. The five states with recent enactments by state legislature are Colorado, Idaho, and Pennsylvania.
In Colorado, Senate Bill 144 (SB 144) requires that all motor vehicle repair shops operating in the state must obtain a surety bond twice the amount of the retail value of a vehicle whenever they choose to seek title for any abandoned vehicle.
Idaho has two new requirements pertaining to motor vehicle regulation. House Bill 365 mandates that all dealers of motor-driven cycles comply with the $20,000 surety bond requirement, which currently is in existence for vehicle dealers operating in the state. Additionally, Idaho House Bill 440 requires all dealers of truck campers to obtain a $10,000 license bond.
The enactment of Pennsylvania Senate Bill 1019 (SB 1019), makes it a requirement for all state recreational vehicle dealers to obtain a license bond in the amount of $30,000, in order to act as a security against any possible claims. Specifically, this license bond will protect against claims brought up by an agency of the commonwealth for money past due, such as fees, licenses, unpaid taxes, payment of criminal penalties, civil fines/penalty, etc.
According the recently enacted Kansas House Bill 2315 (HB 2315), home inspectors are now required to register with the Home Inspectors Registration Board if they wish to legally operate in the state of Kansas. They are required to submit proof of a fidelity bond of no less than $10,000 to the Board, which will cover dishonesty of the home inspector. Additionally, home inspectors are required to separately submit proof of financial responsibility. This proof can come in the form of a surety bond (license bond, which is a type of commercial bond) for at least $10,000, one that cannot be terminated without at least 30 days advance written notice to the Board. In addition to the surety bond option, home inspectors can meet their proof of financial responsibility requirement with an irrevocable letter or credit (no less than $10,000), or with an escrow account with a minimum balance of $10,000. Additionally, financial responsibility can be demonstrated via an errors and omissions insurance policy.
However, a similar bill was defeated in the state of Georgia. If passed, Georgia Senate Bill 485 (SB 485) would have required home inspectors to be officially licensed, purchase liability insurance for a specific amount that would be determined by regulation, and either purchase a surety bond or maintain no less than $100,000 in net assets.
In July 2008, North Carolina House Bill 2463 was passed, and contained a number of changes to the state’s “Mortgage Lending Act” (Article 19 of G.S. 53). While Article 19 applied to just mortgage bankers and mortgage brokers (mortgage lenders), HB 2463 extended coverage to include “mortgage servicers” in the state of NC.
This bill requires mortgage servicers to post a $150,000 license bond (type of commercial bond/surety bond), the same type/amount already required by other mortgage lenders operating inNorth Carolina.
With the signing of this bill, the NC Banking Commission is now authorized to charge a fee for expenses incurred during examinations of any licensees’ books/records in order to ensure compliance. Before HB 2463, such examinations were paid for by the Commission.
To clarify, the term “mortgage bankers” pertains to a person that makes mortgage loans, while “mortgage brokers” are people who solicit applications for such loans, issue loan commitments, etc.
On 9 October 2008, Pennsylvania Governor Ed Rendell signed 10 bills into law, one of which, Senate Bill 1019, pertained to Pennsylvania Recreational Vehicle (RV) Dealers.
The two major takeaways from SB 1019 are as follows:
- Any person who wishes to act as an RV dealer in the state of PA is required to purchase/post a $30,000 license bond (a type of commercial surety bond). This is obviously only required of RV dealers that have not already posted a license bond with the Pennsylvania Department of Transportation (PennDOT). The license bond is required by RV dealers to ensure they comply with all the pertinent laws and regulations in the state.
- SB 1019 (PA) also gives the Pennsylvania State Board of Vehicles the authority necessary to discipline out-of-state RV dealers that choose to violate Pennsylvania law.
In July 2008, in response to an extreme drought and in an effort to more efficiently use the precious resource, water, the General Assembly of North Carolina passed House Bill 2353 (Senate Bill 1795), short title “Irrigation Contractors Licensure/Fees”, which created “The North Carolina Irrigation Contractors’ Licensing Board”. The initial board was to be selected no later than 1 October 2008.
According to the law, any person in the state that operates as an “irrigation contractor”, or under the appearance of an irrigation contractor must be properly licensed inNorth Carolina. The bill requires all “irrigation contractors” in the state to purchase a $10,000 license bond (type of commercial surety bond) in order to operate.
Any irrigation contracting or construction performed by a person, partnership, association, or any other type of group must be directly supervised by a licensed member of the state’s “Irrigation Contractors’ Licensing Boars”, which was created from this bill.
Legislation was recently passed that now places Alaska-based mortgage bankers and mortgage brokers under the direct regulation of the state’s Division of Banking and Securities. The new legislation requires all brokers and lenders that apply in the state after 1 July 2008 to ensure compliance with the new regulations. The law requires all mortgage brokers and mortgage bankers throughoutAlaska, not just new applicants, to be in compliance with the new regulations no later than 1 March 2009.
Some of the new regulations under the Alaska Division of Banking Securities are a more extensive background check, additional monitoring of company records and applications. There will also be a mandatory examination and annual continuing education requirements for Mortgage Originators. A surety bond in the amount of $25,000 will be required as well. However, sinceAlaskais not considered to be a “brick & mortar state”, physical offices will not be required for mortgage brokers/bankers.