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Workers Compensation Bond

A Workers Compensation bond is a type of surety bond required of employers that wish to enter into a self-insurance agreement with their state. In states where the option to self-insure the required worker's compensation coverage, a surety bond requirement may exist if that option is selected.

What is a Workers Compensation Surety Bond?

Workers compensation bonds are a type of financial guarantee surety bond. It provides a form of guarantee that any worker's compensation payments due employees will be paid. In a case where a payment is due but not paid by the employer, a claim may be placed on the surety bond. The surety would pay the amount due up to the bond amount. The surety would then attempt to collect the amount paid out on claim from the employer. The employer is ultimately financially responsible for any claims paid on the surety bond. There are also situations where an employer can opt to pay into a self-insurance fund. A workers compensation bond may be required in these situations as well to guarantee payments to the fund are made as agreed.

How does a Workers Compensation Bond work?

If someone has reason to believe their employer withheld worker's compensation payments, they have the right to file a claim against the workers compensation surety bond seeking reimbursement equal to the amount of lost compensation. As long as the claim is valid and holds up under investigation, the surety guarantees payments even if the principal can't or won't pay. When the surety must step in to pay, however, the principal must pay the debt back with interest and fees. In that way, surety bonds both guarantee someone can seek justice in the form of financial compensation and ensure employers can't escape their duty to pay worker's compensation.

Who should get a Workers Compensation Bond?

Typically, any employer wanting to enter into a self-insurance agreement with the state. Specific surety bond requirements vary by state, but all of them use a bonding requirement to preserve the integrity of the worker's compensation system. Failure to obtain a workers compensation bond can make it difficult to establish a business and impossible to run one legally, so it's important to secure a surety bond as soon as one becomes necessary.

Who are the parties involved in a Workers Compensation Bond?

The employer and employee are two parties in an agreement that involves three parties total:

• Principal - This is the employer. The principal must obtain the surety bond and must pay for all claims.
• Obligee - This is the employee. The obligee has the right to file claims when an employer fails to provide worker's compensation according to state laws.
• Surety - This is the bond company. The surety issues a surety bond to the principal and then backs that bond for the benefit of the obligee. The principal must pay back any claims the surety settles.

How much does a Workers Compensation Surety Bond cost?

The penalty or surety bond amount varies state to state. Each state either dictates the required surety bond cost or provides a way to calculate the amount. The surety bond amount given is the total amount the Surety is responsible for in the instance of a claim or claims on the bond. Principals pay a small percentage of the bond amount in the form of a premium, which will be higher or lower depending on the principal's credit and financial strength. If you're worried about being denied a surety bond because of bad credit - a low credit score or a history of bankruptcy - work with Viking Bond Service. We offer a special bad credit bond program that can help applicants get the bond they need.

How are claims handled for Workers Compensation Bond?

A surety will only settle valid claims, and they never take it for granted that claims are true. Instead, they investigate each one using whatever experts - lawyers, accountants etc - necessary. When the surety settles a claim, the principal becomes legally responsible for paying that same amount back with whatever interest and fees included as outlined in the bond agreement.

How to apply for a Workers Compensation Bond?

It's simpler than you expect. To apply, you only need to submit a standard surety bond application. It will ask for information about your business and background and should only take a few minutes to complete. Then, underwriters will use the application to evaluate your credit risk and quote you a price. After you pay, the surety bond becomes active and you receive documentation proving you've met the bond requirement.

Viking Bond Service - Workers Compensation Bonds in All States

To make getting your workers compensation bond, or any other surety bond, simple, quick and easy, work with Viking Bond Service. You can connect with our team of bonding experts to ask questions and get detailed information by calling 1-888-278-7389 or by filling out the contact form on this page. You can also get the bonding process started 24/7. Simply complete this online application whenever you're ready.