Glossary of Business Credit Terms

# A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Public Official Bond

What Is a Public Official Bond?

A public official bond is a bond taken by civil servants in public offices that guarantees that the officials will adhere and comply to the rules and regulations of that office, and perform their duties faithfully. Some public offices come with the responsibility of handling money or other sensitive information and this bond shows that these individuals can be trusted to carry out these services. Public official bonds are required by law in most cases.

How Does a Public Official Bond Work?

Public official bonds, being a type of surety bond is a contract made between three parties: The principal who is the public official, the Surety which is the insurance or bond company, and the obligee which is the government agency and by extension the public.

The Public official takes out the bond before being sworn into office. If during the period of service, a claim is made against the public official, an investigation is carried out by the bond company and if the claims are verified the Surety pays the amount asked for in damages for up to the face value of the bond. The Public official is then legally bound to reimburse the expenses made by the Surety.

If a claim is made on a public official bond, the public official in question may find it hard to get bonded in the future. Also, for public official bonds, claims can be made long after the bond has expired if they are found to be genuine. Hence, this bond holds public officials responsible for their actions in office long after the bond expires.

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