Cost Surety Bond
You have the right to file a lawsuit in another state, but you may have to secure a cost bond first. This easy overview explains everything you need to know.
What is a Cost Bond?
Cost bonds guarantee that the bonded party will pay the courts for all costs associated with pursuing litigation. Those costs could relate to courts, attorneys, private investigators, copying services, or record requests: any expense involved with conducting the lawsuit. Plaintiffs must obtain bonds before the lawsuit proceeds, and if they fail to pay costs at any point, the court may file a claim against the bond seeking financial compensation. Bonds help keep frivolous lawsuits out of the courts by requiring the plaintiff to shoulder the entire expense.
How does a Cost Surety Bond work?
When a plaintiff is unable or unwilling to pay for court and other costs, the courts can file a claim against the bond. After the surety confirms the claim is valid, they compensate the courts up to the total value of the bond and collect that same amount from the bonded party who refused to pay. Even though the bond company guarantees payment, the financial responsibility falls to the bonded party, the principal.
Who should get a Cost Bond?
They're often, though not always required when someone files a lawsuit from out of state, but they may also be required from plaintiffs in state if the courts have reason to suspect the motives behind the lawsuit. After learning about the bond requirement, find a surety to work with quickly so that your suit can proceed.
Who are the parties involved in a Cost Surety Bond?
As the bonded party, you are one of three parties involved:
- Principal - The bonded party and the plaintiff in the lawsuit. Principals must pay for the bond and for any claims filed against it.
- Obligee - The bond beneficiary, in this case the courts. Obligees may file a claim against the bond seeking financial compensation.
- Surety - The company that issues the bond to the principal and guarantees payment to the obligee.
How much does a Cost Bond cost?
When the courts decide you need a bond, they will also assign a bond amount, meaning the total the surety agrees to pay out to settle claims. Amounts vary but often fall in the $500 range. The principal pays just a small percentage of that based on their credit history, making cost bonds one of the most affordable bonds available as long as obligees don't file claims.
How are claims handled for Cost Surety Bond?
The surety investigates any claims it receives, but since the court is the one filing those claims, it typically takes minimal investigation to prove them valid. If the principal refuses to pay at this point, the surety guarantees the obligee payment. That settles the claim, but the principal now owes the surety whatever amount it paid plus interest and fees.
How to apply for a Cost Surety Bond?
Before applying, take some time to find a great surety to work with like Viking Bond Service. When you're ready to move forward, you will submit a copy of the court order requiring the bond as well as a bond application with information about your history and finances. After evaluating that information, the surety will quote you a price.
Viking Bond Service - for fast quotes and great service
Now that you know the cost bond definition and understand how this process works, take the next step. Viking Bond Service provides everything you need to satisfy the courts and move your lawsuit forward. Reach out to our team through the contact form on this page or by calling 888-278-7389.
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