Private School Bonds

Each school bond is different, so there is no simple answer to this question. Each type of private school bond has a different total amount, which refers to the maximum coverage it offers. State set their own amounts for each bond. For example, Louisiana requires a $10,000 surety bond, while in Minnesota it can range between $10,000 and $250,000. Bond amounts in some states may be based on factors such as number of locations or total sum of collected tuition fees.

Private schools pay only a percentage of these amounts, known as the “bond premium.” These are not determined by the state, however, but by the surety bonds company which underwrites them. Bonding companies evaluate each application to assess the risk they undertake when signing a bond for that particular private school. Mostly, they look into the personal credit score of the owners, to predict a school’s likelihood of triggering a claim. Factors such as financial strength are also seriously considered, because they show that a private school will be able to pay their claims should they happen.

Applicants with good credit usually pay premiums no higher than 4%. To learn about other factors influencing bond premiums, go to our What Does a Surety Bond Cost? Page.

The risk for surety underwriters is higher when the applicant has bad credit or no credit history. Depending on the particular situation, some bonding companies may refuse to get bad credit applicants bonded, if they deem the financial risk too high.

Lance Surety Bonds successfully gets 99% of applicants bonded. You may be asked to disclose financial documentation, and you premium will be higher: normally between 5% and 10%. Our agents can help you with building a strong application which surety bonds company will accept and examine more favorably. Read more about our bad credit surety bonds program.

To apply for a private school bond, you’ll need to complete our online application. Based on the information you provide, we’ll let you know what else we will need in order to process your bond request.

Approval times rarely take more than 48 hours, so you can receive your bond form in just a few business days.

Depending on the specific language of your private school bond, you may be liable for a claim. The usual scenario involves not fulfilling contractual obligations towards students, such as closing down prematurely. If that’s the case, and a valid claim is made against you, the surety bonds company is responsible for making good on the claim and compensating the claimant. The maximum compensation that can be awarded to claimants is the total amount of the bond.

However, you will be responsible for compensating the surety in full afterwards as per the indemnity agreement you’re required to sign.

It’s best to stay away from claims because they can be very expensive, and prevent you from renewing your school’s permit.