Public Official Bond

Public Official Bond


How Public Official Bonds Work

Public official bonds (which are also known as federal official bonds when referring to someone working for the federal government as a public official) are a type of surety bond. A public official bond steps in to provide financial compensation if a public official fails to faithfully discharge the duties of his or her office. 


The point of a public official bond is to protect the public. Keep reading to learn more about what public official bonds are, how they work, and what they can cost. 

What is a Public Official Bond?

A public official bond is a type of surety bond that is required of certain public officials in order to ensure that they will perform their duties honestly and faithfully. The bond is a financial guarantee that is provided by a third party, typically a surety company, to the government entity that the official serves. 


If the official fails to perform their duties in accordance with the law or otherwise violates their obligations, the government entity can make a claim against the bond to recover any damages that may have been incurred as a result. Public official bonds are commonly required of elected officials, such as mayors and city council members. This bond can also be required of appointed officials, such as judges and police officers. 


Public official bonds are usually required  by court offices, universities, school districts, sheriff departments, and governments at a variety of levels (municipal, county, state, and federal). 

Who Needs a Public Official Bond?

Public official bonds are designed to protect the government and the public from financial loss due to misappropriation of funds or other forms of misconduct by the bondholder while in office and as a result are often a requirement for public officials who want to hold office, such as:


  • Postal units

  • Treasurers and subordinates

  • Sheriffs, deputies and constables

  • Tax collectors and subordinates

  • Town supervisors

  • Judges and court clerks

How Public Official Bonds Work

Public official bonds work the same as all surety bonds and involve three distinct parties:


  • Surety. This is the company that issues and backs the surety bond, as well as pays out any valid claims. 

  • Principal. The principal is the party who must hold the surety bond and when it comes to public official bonds this is the public official. 

  • Obligee. The party who requires the surety bond (such as a government agency) is known as the obligee.

How Much Do Public Official Bonds Cost?

Before addressing how pricing for public official bonds work, it helps to understand the terms bond premium and bonding capacity.


The bonding capacity is the maximum amount that can be claimed against the bond in the event of a financial loss due to the bondholder's misconduct while in office. The cost of the bond, known as the bond premium, is determined in part by the bonding capacity. 


The bond premium is set as a small percentage of the bonding capacity and all applicants are offered a unique percentage based on factors personal to them, such as:


  • Personal

  • Years in business

  • Industry experience



The applicant's credit score is a significant factor in determining the terms of a surety bond. A higher credit score may lead to a lower percentage offered by the surety, as the surety wants assurance that the applicant has a history of responsibly managing credit. This is because the surety may be required to pay out claims initially, and a higher credit score indicates that the applicant is more likely to be able to fulfill their financial obligations and pay back the surety.


If someone wants a lower rate, they can work to improve their credit score before applying for a public official bond or before renewing it at the end of the bond term. 


There are a number of steps you can take to improve your credit score:


  • Make your debt payments on time. The best way to keep your credit score high is to consistently make on time payments to your debt, such as your credit card balance.

  • Pay down your debt. Your credit utilization ratio, or the amount of debt you have compared to your credit limits, accounts for a large portion of your credit score. Paying down high balances can help improve your credit score.

  • Check your credit report for errors. Mistakes on your credit report can lower your credit score. You can request a free copy of your credit report from each of the three major credit bureaus (TransUnion, Equifax, and Experian) once per year.

  • Use credit responsibly. Using credit responsibly, such as paying your bills on time and keeping your credit utilization low, can help improve your credit score over time.