Hawaii Private Trade, Vocational, or Technical School Bond
Surety Bond Professionals is a family owned and operated bonding agency with over 30 years of experience. With access to a broad range of surety markets, our expert agents are ready to assist with all of your Hawaii private trade, vocational, or technical school bond needs.
What Are Hawaii Private Trade, Vocational, or Technical School Bonds?
These are surety bonds that provide financial protection for those who have prepaid tuition and fees at certain private schools, providing technical or career education in the state of Hawaii. They provide a way for students (or their parents) who have paid for the educational services specified in the student contract but have not received them and have not been issued a refund to seek compensation. The biggest risk is that the school might close without refunding prepaid tuition and fees or “teaching out” students before shutting down.
Who Needs Them?
Certain private postsecondary schools must purchase a $50,000 surety bond before the Hawaii Department of Education grants them a license. You’ll be notified if the type of school you are establishing is subject to the bonding requirement. You may qualify for a reduction of the required bond amount if your school will never have collected more than $50,000 in prepaid tuition and fees at any point in time.
How Do They Work?
A private trade, vocational, or technical school bond creates a legally binding contract among three parties: the Hawaii Department of Education (the bond’s “obligee”), the school’s owner (the bond’s “principal”), and the bond’s guarantor (known as the “surety”).
The terms of the bond legally obligate the principal to operate in compliance with all applicable state laws and provide the educational services promised in the student contract. Any infraction can result in claims for damages being filed against the bond by the injured parties.
How Are Claims Paid?
The principal is legally obligated to pay all valid claims against the bond, and the surety has guaranteed their payment. Because of that guarantee, the surety will pay a claim that is deemed valid, but only initially, on behalf of the principal. The legal responsibility for the claim still rests with the principal, who must reimburse the surety for the amount paid to the claimant. The surety has the right to take legal action against the principal to recover the funds, if necessary.
How Much Do They Cost?
What you will pay as the annual premium for a Hawaii private trade, vocational, or technical school bond depends on the required bond amount and the premium rate, which the surety assigns through underwriting. The primary underwriting concern is the risk of the surety not being repaid for claims paid on the principal’s behalf.
The risk is assumed to be low when the principal has a high personal credit score, and that deserves a low premium rate. A less creditworthy principal poses a higher risk to the surety, which warrants a higher premium rate.
The average well-qualified principal will pay a premium rate that’s in the range of one to three percent.
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Our surety bond professionals will get you the Hawaii private trade, vocational, or technical school bond you need at a competitive rate.