Bonds
We are pleased to offer several types of bonds to meet the needs of our clients.
- Medicare Bond
- Bid Bond
- Lost Title Bond
- Merchant's Bond
- Conduct Surety Bond
- Notary Bond
- All Purpose Application
Medicare Bond
New Medicare Bond Opportunity Available
Federal government requires bonds for Medicare equipment suppliers.
The Centers for Medicare & Medicaid Services (CMS) now requires Durable Medical Equipment, Prosthetic and Orthotic Suppliers (DMEPOS) to have a bond. Existing suppliers are required to file their bonds by October 2, 2009.
The bond is required of those who bill Medicare for equipment they sell. In general they will need one bond per enrolled location.
Who needs the bond?
DMEPOS Suppliers. Certain exceptions apply (including physicians, non physician practitioners selling equipment to their own patients, certain orthotics and prosthetic suppliers and government owned and run suppliers). One bond is needed for each separate enrolled location.
How much is the bond?
The bond is $50,000 per enrolled location. A bond in excess of $50,000 may be required if they have had past violations. We are not a market for those with past violations.
What does it guarantee?
It guarantees unpaid claims, penalties, assessments imposed by the Centers for Medicare & Medicaid Services (CMS). It is intended to help prevent fraud and abuse of the Medicare system.
How will we underwrite?
If an applicant needs one bond, we will require a completed and signed application, including:
1. The complete name and address for the applicant. Please note this is the name the bond will be written in.
2. National Provider Identification (NPI) Number and National Provider Transaction Access Number (PTAN) – also known as the Medicare Legacy Number per enrolled location.
3. Personal information on each owner of the business. This includes the name, address, Social Security number and verification whether he/she owns any real estate.
4. Business and personal indemnity of all owners and spouses.
5. Information regarding how long they have been in business.
If the applicant has been in business for less than three years, does not own real estate, or has more than one enrolled location and therefore needs more than one bond, the following additional information is required:
6. A business financial statement.
7. A personal financial statement from each owner.
Rates:
$10 per thousand
• Over 3 years in business
• Owns real estate
• Clean credit
This is approved in most states.
$5 per thousand
• State licensed and accredited
This rate is approved in most states.
$20 per thousand
• All others
Download Medicare Bond Application
Bid Bond
Construction Surety Bonds In Plain English
Most construction contractors are familiar with the process of obtaining surety bonds, but they may not be aware of the legal relationships bonds establish the relationships among the principal (the contractor), the obligee (usually the owner) and the surety. Contractors' lawyers, on the other hand, are aware of the rights and the obligations of the principal, obligee, and surety, but they may lack practical knowledge about the process of obtaining bonds. This article is directed to both contractors and their lawyers. It explains in plain English just when construction surety bonds are required on federal, state, and private projects, and the bonding requirements contained in widely used contract forms, including federal government contracts, AIA contract forms, and the AGC subcontract form.
SOME SURETY BOND BASICS
A surety bond is not an insurance policy. A surety bond is a guarantee, in which the surety guarantees that the contractor, called the "principal" in the bond, will perform the "obligation" stated in the bond. For example, the "obligation" stated in a bid bond is that the principal will honor its bid; the "obligation" in a performance bond is that the principal will complete the project; and the "obligation" in a payment bond is that the principal will properly pay subcontractors and suppliers. Bonds frequently state, as a "condition," that if the principal fully performs the stated obligation, then the bond is void; otherwise the bond remains in full force and effect.
If the principal fails to perform the obligation stated in the bond, both the principal and the surety are liable on the bond, and their liability is "joint and several." That is, either the principal or surety or both may be sued on the bond, and the entire liability may be collected from either the principal or the surety. The amount in which a bond is issued is the "penal sum," or the "penalty amount," of the bond. Except in a very limited set of circumstances, the penal sum or penalty amount is the upward limit of liability on the bond.
The person or firm to whom the principal and surety owe their obligation is called the "obligee." On bid bonds, performance bonds, and payment bonds, the obligee is usually the owner. Where a subcontractor furnishes a bond, however, the obligee may be the owner or the general contractor or both. The people or firms who are entitled to sue on a bond, sometimes called "beneficiaries" of the bond, are usually defined in the language of the bond or in those state and federal statutes that require bonds on public projects.
TYPES OF SURETY BONDS
A surety bond is a contract among at least three parties:
- The principal - the primary party who will be performing a contractual obligation
- The obligee - the party who is the recipient of the obligation, and
- The surety - who ensures that the principal's obligations will be performed.
Surety Bonds are in Europe normally issued by banks and are called "Bank Guarantees" (English) "Caution" (French) and pay out cash to limit of guarantee in event of default of Principal to uphold his obligations to Obligee, without reference by Obligee to Principal and against obligee's sole verified statement of claim to Bank.
Through a surety bond, the surety agrees to uphold—for the benefit of the obligee—the contractual promises (obligations) made by the principal if the principal fails to uphold its promises to the obligee. The contract is formed so as to induce the obligee to contract with the principal, i.e., to demonstrate the credibility of the principal and guarantee performance and completion per the terms of the agreement.
The principal will pay a premium (usually annually) in exchange for the bonding company's financial strength to extend surety credit. In the event of a claim, the surety will investigate it. If it turns out to be a valid claim, the surety will pay it and then turn to the principal for reimbursement of the amount paid on the claim and any legal fees incurred.
If the principal defaults and the surety turns out to be insolvent, the purpose of the bond is rendered nugatory. Thus, the surety on a bond is usually an insurance company whose solvency is verified by private audit, governmental regulation, or both.
A key term in nearly every surety bond is the penal sum. This is a specified amount of money which is the maximum amount that the surety will be required to pay in the event of the principal's default. This allows the surety to assess the risk involved in giving the bond; the premium charged is determined accordingly.
Surety bonds are also used in other situations, for example, to secure the proper performance of fiduciary duties by persons in positions of private or public trust.
State insurance commissioners are responsible for regulating corporate surety activities within their jurisdictions. The commissioners also license and regulate brokers or agents who sell the bonds.
BID BONDS
A bid bond guarantees the owner that the principal will honor its bid and will sign all contract documents if awarded the contract. The owner is the obligee and may sue the principal and the surety to enforce the bond. If the principal refuses to honor its bid, the principal and surety are liable on the bond for any additional costs the owner incurs in reletting the contract. This usually is the difference in dollar amount between the low bid and the second low bid. The penal sum of a bid bond often is ten to twenty percent of the bid amount.
PERFORMANCE BONDS
A performance bond guarantees the owner that the principal will complete the contract according to its terms including price and time. The owner is the obligee of a performance bond, and may sue the principal and the surety on the bond. If the principal defaults, or is terminated for default by the owner, the owner may call upon the surety to complete the contract. Many performance bonds give the surety three choices: completing the contract itself through a completion contractor (taking up the contract); selecting a new contractor to contract directly with the owner; or allowing the owner to complete the work with the surety paying the costs. The penal sum of the performance bond usually is the amount of the prime construction contract, and often is increased when change orders are issued. The penal sum in the bond usually is the upward limit of liability on a performance bond. However, if the surety chooses to complete the work itself through a completing contractor to take up the contract then the penal sum in the bond may not be the limit of its liability. The surety may take the same risk as a contractor in performing the contract.
PAYMENT BONDS
A payment bond guarantees the owner that subcontractors and suppliers will be paid the monies that they are due from the principal. The owner is the obligee; the "beneficiaries" of the bond are the subcontractors and suppliers. Both the obligee and the beneficiaries may sue on the bond. An owner benefits indirectly from a payment bond in that the subcontractors and suppliers are assured of payment and will continue performance. On a private project, the owner may also benefit by providing subcontractors and suppliers a substitute to mechanics' liens. If the principal fails to pay the subcontractors or suppliers, they may collect from the principal or surety under the payment bond, up to the penal sum of the bond. Payments under the bond will deplete the penal sum. The penal sum in a payment bond is often less than the total amount of the prime contract, and is intended to cover anticipated subcontractor and supplier costs.
Lost Title Bond
A bond may be required by the Texas Motor Vehicle Division when proper ownership documents are unavailable. The bond protects previous and subsequent owners and lien holders from possible claims. The bond is to be issued in the title applicant's name and is valid for a three-year period. Good credit and supporting documentation is required for bond approval.
Download Lost Title Bond Application
Merchant's Bond
A Dishonesty Bond is a Fidelity Bond. It is a bond which indemnifies the insured (principal) for loss caused by the dishonest or fraudulent acts of its covered employees. The bond does contain a conviction clause, meaning the person(s) accused of the dishonest or wrongful act, must be convicted before the bond would pay.
Download Merchant's Bond Application
Conduct Surety Bond
These bonds are required by new establishments selling alcoholic beverages, beer or wine. The bonds guarantee the permit holder will faithfully conform to all the rules of the Texas Alcoholic Beverage Commission and if they violate these rules the bond amount will be paid to the state. For retailers located within 1000 feet of a public school, the bond required is $10,000. All others are $5,000. The bonds are required for the first three years in business provided there have been no violations. Good credit of all owners is required for us to write these bonds.
Bond Amount: $5,000 or $10,000
Download Conduct Surety Bond Application
Notary Bond
A Notary Public is a public servant with statewide jurisdiction who is authorized to take acknowledgments, protest instruments permitted by law to be protested (primarily negotiable instruments and bills and notes), administer oaths, take depositions, and certify copies of documents not recordable in the public records. A Notary Public is "an officer of the State of
Download Notary Bond Application