Professional Bonds: Notary and Mortgage Bonds
Notary and Mortgage Bonds: Meeting Licensing Requirements
Many professions need a bond before they can operate.
Why this matters: Some states require notaries, and mortgage brokers, lenders, and loan originators, to carry a surety bond as part of licensing. The bond helps protect the public from financial harm caused by a licensee’s misconduct.
How a bond works: A surety bond involves three parties: the principal (you), the obligee (the party requiring the bond, such as a state), and the surety (the company issuing it). If a valid claim is paid, the principal is generally responsible for repaying the surety.
Notary bonds: Protect members of the public from losses due to the notary’s errors or misconduct, and generally don’t protect the notary. Notaries may want errors and omissions (E&O) coverage as well.
Mortgage bonds: Often required for licensing of mortgage brokers, lenders, and originators. Requirements and amounts vary by state.
Common gaps: A bond is not insurance for you. Claims can be passed back to you. E&O, general liability, and cyber coverage are separate.
Who needs it:
- Notaries, including mobile and loan signing agents
- Mortgage brokers, lenders, and loan originators
- Anyone licensed in a state that requires a bond
FAQ
Does a notary bond protect me? Not typically. It protects the public, so consider E&O coverage.
How much does a bond cost? Premiums are usually a percentage of the bond amount and may depend on credit and other factors.
How long does it take to get a bond? Many bonds can be issued quickly once approved.
Do bonds need to be renewed? Often yes, on the schedule your state or license requires.
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Business Bonds: Surety, Fidelity and Contract Bonds
Header banner: Surety, Fidelity and Contract Bonds: Build Trust and Win Work
Tagline: Bonds help prove your business is reliable.
Why this matters: A bond can open the door to projects, licenses, and customers, and protect your business from employee dishonesty. They work differently from insurance and serve different goals.
Surety bonds: A broad category in which the surety guarantees that you will fulfill an obligation, such as meeting licensing rules or completing a contract.
Contract bonds: Often used in construction. Bid bonds support your offer, performance bonds support completion of the work, and payment bonds help ensure subcontractors and suppliers are paid.
Fidelity bonds: Protect your business against losses from employee dishonesty such as theft. They’re often grouped with crime coverage, and some retirement plans are required to carry one.
Common gaps: Surety bonds usually require an indemnity agreement, and you must repay claims. Fidelity coverage doesn’t typically cover losses caused by owners, and may have exclusions.
Who needs it:
- Contractors and subcontractors bidding on public or private projects
- Businesses required to be licensed or bonded
- Employers who handle customer money or sensitive assets
FAQ
What’s the difference between a bond and insurance? Insurance protects you, while a surety bond protects the party requiring it and you repay claims.
Will my credit matter? Underwriting often considers credit and financial strength.
Can new businesses get bonded? Often yes, though options and pricing can vary.
Do I need a bond for every job? Some projects require it and others don’t. Check each contract.
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