Louisiana Proprietary 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 Louisiana Proprietary School Bond needs.
What Are Louisiana Proprietary School Bonds?
Louisiana proprietary school bonds provide a way to ensure students are reimbursed if their school closes its doors mid-term without refunding unearned, prepaid tuition. They also provide compensation for monetary losses caused by a proprietary school’s deliberate misrepresentation or fraudulent act or failure to:
- Comply with applicable rules and regulations in the Louisiana Revised Statutes
- Live up to the terms of the student contract
- Deliver the educational services as advertised
- Maintain complete and accurate student records
Who Needs Them?
In Louisiana, proprietary schools are required to purchase a $10,000 surety bond as a prerequisite to being licensed by the State Board of Regents, Division of Planning, Research and Performance, Proprietary Schools Section (referred to as the bond’s “obligee”). The bond must be continuous until canceled. Not having an active bond in force at all times can cause the school’s owner (the bond’s “principal”) to lose their license to operate.
How Do They Work?
A Louisiana proprietary school bond brings the obligee and principal together with a third party—the “surety”—in a legally binding contract. The surety is the bond’s guarantor, specifically guaranteeing the principal’s payment of valid claims. But the legal obligation to pay claims belongs exclusively to the principal.
How Are Claims Paid?
When a student (or parent or guardian) files a claim for monetary damages against a school’s surety bond, the surety will determine whether the bond is valid and approve it for payment. Unless the principal pays the claim without delay, the surety will step up and pay it on the principal’s behalf. That payment essentially is a loan to the principal and must be repaid to avoid legal action by the surety to recover the funds.
How Much Do They Cost?
The annual premium for a Louisiana proprietary school bond is calculated by multiplying the $10,000 required bond amount by the premium rate the surety assigns to the principal. The premium rate is based on the underwriters’ assessment of the risk that the principal might fail to repay the surety for claims paid on the surety’s behalf. They measure that risk by the principal’s personal credit score, which is a barometer for the principal’s level of financial responsibility.
A principal with a high credit score is assumed to pose little risk to the surety, which results in a premium rate that could be as low as 1%. A lower credit score is a red flag for higher risk, 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.
Get a Quote
Our surety bond professionals will get you the Louisiana proprietary school bond you need at a competitive rate.