Bond Amounts

[Bond Magician]

How come each state requires a different bond amount? What determines the bond amount? The amount of losses, if any?

[Max Slivens]

Most often, Bond amounts are set by State, City and/or County Legislation. The REASON a specific Bond amount is used is actually quite a good question. For example, the requirement for a Real Estate Broker Bond in MA is $5,000. Yet, the requirement for a Mortgage Broker Bond in GA is $150,000. Why the vast difference in Bond amount? The world may never know. Common sense would tell you that the Bond amount should be based on the assumed risk of loss, and previous Industry loss experience. However, there are times where it seems to be implemented completely randomly.

[Admin]

I would have to say more often than not the amount is decided at random. Often when there is a new bond requirement it is a ridiculously large amount, which most do not qualify for. Usually the amount is reduced once enough people complain they can not obtain it (or afford it).

The politicians that consult someone within the surety industry are the ones that usually make a suitable bond amount (w/ a surety accepted bond form) the first time out.