What is a treasurer surety bond?
The treasurer is responsible for managing or overseeing the management of an organization’s finances. A great deal of trust rests with the treasurer, as the organization relies on them to perform their responsibilities ethically and honestly. As a method to ensure financial loss through misconduct doesn’t occur, a surety bond is a common requirement of treasurers.
The bond serves as a three-party contract between the following:
The principal: The treasurer or the position of treasurer is assigned as the principal of the bond. As the principal, the treasurer promises the obligee they will conduct their duties lawfully and/or in accordance with their organizations bylaws.
The obligee: The organization the treasurer serves is the obligee to the bond. If the treasurer causes financial loss through misconduct while performing their duties, the organization may file a claim on their bond.
The surety: This is the entity that issues the fidelity bond to the treasurer. In the event of a valid claim against the fidelity bond, the surety will pay out up to the full amount of the bond, less the deductible to the principal. Unlike traditional surety bonds, the treasurer does not have to make the surety financially whole. Instead, you would need to submit the claim and evidence of employee theft/dishonesty to the surety. They would then validate the claim and pay up to the policy limit less the deductible. It should also be noted that any collection back from the individual(s) who committed the dishonesty/theft would need to be remitted to the insurer.
Why does the treasurer need a bond?
Typically, the treasurer surety bond requirement is set by statute or the bylaws of an organization. The bond provides peace of mind to the organization, donors and investors on the handling of funds. However, the bond should not be considered a replacement for proper internal controls. An annual audit of records should be performed by the organization to ensure activities are being conducted properly.
How much does a treasurer bond cost?
The cost of the treasurer bond, known as the premium, is a small percentage of the total amount of the bond. The premium for these bonds is based on the business class that your business operations fall into, the number of employees and the amount of the bond needed.
A soft pull on the applicant’s credit is performed and additional financial documentation may be requested to assess the risk associated with bonding the treasure or the position of treasurer. The greater risk associated with the bond increases the premium.
How to get a surety bond?
Surety Solutions, A Gallagher Company has partnered with the American Association for Respiratory Care to provide a fast and easy solution to purchase your treasurer surety bonds. Select the bond range you need below to complete and submit your online application. If you have any questions about the bond or our application, please contact our Surety Solutions expert team by emailing [email protected].
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