Nevada Private Postsecondary Educational Institution 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 Nevada Private Postsecondary Educational Institution bond needs.
What Are Nevada Private Postsecondary Educational Institution Bonds?
Nevada private postsecondary educational institution bonds provide financial protection for students who have prepaid tuition and fees and subsequently are financially harmed by the school owner’s violation of the student contract.
The biggest concern is that a private postsecondary school will go belly up before all students have completed the courses or programs they paid for and without refunding their tuition and fees. If that should happen, the school’s bond provides a way to compensate them for their loss.
Who Needs Them?
The Nevada Commission on Postsecondary Education (CPE) requires all applicants for licensure to purchase a surety bond. The Commission (the “obligee” requiring a bond) will determine the amount of each bond, with a minimum of $10,000 and a maximum of $200,000.
The school owner (the bond’s “principal”) must maintain an active bond in force at all times to avoid having the license to operate revoked.
How Do They Work?
When a party experiencing a monetary loss due to the principal’s actions files a claim for damages, the bond’s guarantor (known as the “surety”) will determine whether it is valid. If it is, the principal is legally obligated to pay it.
How Are Claims Paid?
Here’s where things get interesting. Although the principal is legally obligated to pay all valid claims against a Nevada private postsecondary education institution bond, the surety has guaranteed their payment. However, the surety bond agreement specifically indemnifies the surety against any responsibility for paying claims.
Consequently, the surety, who wants to resolve the matter, pays the claimant directly, on behalf of the principal—but only initially. The initial payment by the surety creates a debt that the principal now owes to the surety and is legally obligated to pay.
The money owed to the claimant has become a debt owed to the surety. Not repaying that debt can result in the surety suing the principal to recover the funds.
How Much Do They Cost?
The annual premium cost of a Nevada private postsecondary education institution bond is the product of multiplying the bond amount set by the obligee and the premium rate assigned by the surety. The premium rate depends on how risky the underwriters believe it is for the surety to pay claims on the principal’s behalf. The main risk is the risk of the principal not repaying the surety as required.
The best measure of the risk of nonrepayment is the principal’s creditworthiness, as reflected in the principal’s personal credit score. Someone with a high credit score has a history of handling credit responsibly, and typically is assigned a low premium rate because of the low risk level. Someone with poor credit will pay a substantially 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 Nevada postsecondary education institution bond you need at a competitive rate.