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ARC bond

ARC bond

Are you involved in the travel industry? If so, you may need a type of surety bond known as an ARC bond to conduct business legally. Read on to learn why you need a surety bond and how to get one.

What is an ARC bond?

An Airline Reporting Corporation bond, commonly called an ARC bond, holds someone accountable if they fail to remit payments from travelers to purchase airline tickets, as those travelers intended. When that happens, the bonded party (who is typically a travel agent, ticket broker, or travel agency) must pay damages.

How does an ARC bond work?

If someone pays a travel agent or another individual to purchase airline tickets on their behalf and the agency does not remit those payments to ARC, a claim can be filed against the ARC surety bond seeking compensation. As long as the claim holds up under investigation, the surety agency that backs the surety bond settles the claim in full. But that doesn't mean the surety agency accepts financial liability. Financial liability always belongs to the bonded party (eg. the travel agent), who must pay the surety back the full amount of the settlement with interest and fees added.

Who needs to get an ARC bond?

The Airline Reporting Corporation decides who needs a surety bond and how large it must be. Anyone who acts as an intermediary between travelers and airlines via the ARC platform potentially needs a surety bond. When required, it's illegal to sell tickets without an ARC bond. Therefore, it's important to secure one ASAP to avoid unnecessary business obstacles.

Why do you need an ARC bond?

The ARC requires surety bonds for two reasons. First, since they hold unscrupulous travel agents/brokers financially responsible for bad behavior, surety bonds discourage these behaviors. Second, since the surety agency guarantees payment for valid claims, surety bonds ensure that ARC is financially protected.

Who are the parties involved in ARC Bonds?

All surety bond agreements, this one included, involve three parties:

  • Principal - The person who pays to get bonded and accepts liability for claims.
  • Obligee - The person who files claims against the surety bond for damages caused by the principal.
  • Surety - The company that issues the ARC Bond to the principal and guarantees payment to the obligee. The principal must pay the surety back for any settled claims.

How to apply for an Airline Reporting Corporation Surety Bond?

Plan to provide these documents to the surety agency: A completed surety bond application, a copy of the ARC bond requirements, and (potentially) a financial statement. All applicants will also need to submit to a credit check, and some will need to turn over additional documentation.

How much does an ARC Surety Bond cost?

The Airline Reporting Corporation dictates how large the bond must be, meaning the maximum dollar amount the surety agency that backs the bond will pay to settle claims. The surety bond costs a small percentage of the total amount, typically 1% to 5% of the bond amount. Surety bond costs vary depending on the applicant's credit score. If you're worried that bad credit could jeopardize your ability to get an ARC surety bond, work with Viking Bond Service.

Viking Bond Service - Nationwide ARC Bonds

If you require an ARC bond, do yourself a favor and choose Viking Bond Service as the surety agency you partner with. We make getting and renewing surety bonds fast, easy, and affordable for everyone we work with. How much would you pay for an ARC bond? Find out by requesting a no-obligation quote at your convenience. Would you like more information first? Reach our team at 1-888-278-7389 or send your questions through the contact form on this page.

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