Any time you deal with budgets, fundraising and large projects, there is a chance for costly errors. Accountants have insurance policies to help cover losses, and public officials have bonds. If elected or appointed to public office, you may need to have a bond in place and know what these bonds are, what they cover and who needs them.
What Are They?
A bond is an insurance product that protects taxpayers from financial losses resulting from a public official’s liability or fraudulent behavior. While you can find public official bonds from places offering criminal liability insurance, it is important to note that the coverage is not identical. You will need to double-check you have the policy items required for the office you hold.
What Do They Cover?
There are three common types of bonds you may find in your research, faithful performance, blanket fidelity and Public Official Schedule Bond. Public or private employers can buy a blanket fidelity bond. In contrast, a faithful performance bond protects against public officials’, employees’ and volunteers’ failure to execute their duties prescribed by law and is usually purchased by public entities. The third type, POSB, is a combination of the first two in that it is regulated by state statute and can be required for specific offices.
Who Needs Them?
The list of officials who need a bond will vary by state or municipality, but treasurers, tax collectors, and subordinates are common. Constables, sheriffs and deputies are other categories of positions needing bonds, as are judges, court clerks and town supervisors. Postal units, such as distribution and sorting centers, will usually need a POSB that lists the position titles and covers all those in the offices named on the bond.
Public officials are responsible for many things, including the funds from taxpayers used for public works projects and other budget items. To help cover losses due to an official’s fraudulent behavior or liability, many employers and individuals purchase a type of insurance called bonds. You may be responsible for security such a bond before taking an elected or appointed office.