Preneed Funeral Bonds
Funeral costs can place an extreme burden on loved ones while they navigate the grief over a death. So many people make arrangements for their funeral well before they need the services. They enter into a "preneed funeral contract" with a funeral home. The contract spells out the individual's wishes for their funeral and provides the funds to pay for it. Most states require that funeral homes entering these contracts take out a preneed funeral bond to ensure they will fulfill their end of the contract.
What is a Preneed Funeral Bond?
A preneed funeral bond is a surety bond that guarantees the funeral home will safeguard the funds entrusted to it for the purpose of carrying out the client's funeral wishes. The bond is a risk-management tool that provides a financial incentive for fulfilling the contract and a mechanism for recovering damages if the contract is violated.
How Does a Preneed Funeral Bond Work?
Like other surety bond types, preneed funeral bonds are legal contracts between three essential parties:
- The Principal is the bonded individual or company, in this case, the funeral home.
- The Obligee is the government agency, company, or individual who requires the surety bond. In this case, the state agency that governs funeral homes is the obligee.
- The Surety is the insurance company that underwrites the bond.
If a funeral home either misuses the funds entrusted to it or fails to follow the client's wishes, family members or the estate can file a claim against the principal – the funeral home. The surety thoroughly investigates all claims. The surety promptly pays the damages up to the bond's full value if the claim is valid. However, meritless claims will be dismissed. The principal is financially responsible for all claims paid and must reimburse the surety.
Who Needs a Preneed Funeral Bond?
Any funeral home that accepts preneed funeral contracts must learn whether their state requires them to acquire a preneed funeral bond. Most states require this surety bond for all funeral homes that offer preneed funeral contracts to do business legally. If you are unsure whether you need this bond, the surety experts at Viking Bond Service will guide you through the process and help get you the information you need.
How Much Does a Preneed Funeral Bond Cost?
The cost of most surety bonds is a tiny fraction of the bond's value. A preneed funeral bond cost is typically between 1-5% of the bond's value. So a $50,000 bond will cost from $500 to $2,000. Whether you pay at the higher or lower end of this range depends upon your credit rating. If your credit is less than sterling, our Bad Credit Surety Bond Program works with you to help you get bonded at a reasonable rate.
How Can I Get a Preneed Funeral Bond?
At Viking Bond Service, we make it quick and simple to get a surety bond. Please complete our online application today, and we'll send you a competitive preneed funeral bond quote ASAP. Or call us toll-free at 1-888-2-SURETY (1-888-278-7389). We look forward to helping your business to prosper.
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