Ohio School Bus Contractor Bonds
Learn everything you need to know about Ohio school bus contractor bonds, and get bonded today with Surety Bond Professionals.
What Are They?
Ohio school districts and school boards that contract out school bus transportation services typically require certain surety bonds as part of the contracting process. Each school district or school board has the authority to require a bid bond and/or a performance bond.
- A bid bond may be required at the time a bid is submitted. The purpose of a bid bond is to ensure that the winning bidder for a school bus contract has the capacity to carry out contractual obligations. It guarantees that the bidder, if awarded the contract, will be able to obtain a performance bond and is committed to accepting and carrying out the contract.
- A performance bond serves as the contractor’s guarantee to provide school bus transportation in accordance with all applicable laws and the terms of the transportation contract. It provides funds to compensate any party that suffers a financial loss as a result of the contractor’s unlawful or unethical actions.
In other words, a bid bond guarantees that you can and will do the job, and the performance bond guarantees that you actually do the job properly.
Who Needs Them?
Any individual or company seeking or awarded a contract to provide school bus transportation services to an Ohio school district or school board may need to obtain an Ohio School Bus Contractor bond.
How Do They Work?
There are three parties to any surety bond agreement. In the case of an Ohio School Bus Contractor bond these are:
- The Ohio school district or school board is the “obligee” requiring the bond.
- The school bus contractor required to purchase the bond is the “principal.”
- The company underwriting and issuing the bond is the “surety.”
The surety bond agreement is a legally binding contract that spells out what the principal must do to avoid claims being filed against the bond. The obligee establishes the required bond amount (also known as the penal amount). Any party who suffers a financial loss due to the principal’s violation of the contract has the right to file a claim against the bond and be compensated up to that amount.
What Happens If a Claim is Filed?
If a claim is filed against the bond, the surety will first determine the validity of the claim. The principal is solely responsible for paying valid claims, but in practice the surety will often pay the claim up front on behalf of the principal. Ultimately, the principal is legally obligated to reimburse the surety for any claim paid in advance.
What Do They Cost?
You will pay an annual bond premium that is only a small percentage of the total required bond amount. Exactly what that percentage will be for any given bond applicant is up to the surety. When determining this rate, the surety will consider several factors, but the most important factor is the contractor’s personal credit score.
Contractors with the good credit scores will be assigned the lowest possible premium rate. Contractors with past credit problems may pay a higher premium due to the higher risk the surety is assuming.
Get Bonded Today
Request an online quote for your Ohio School Bus Contractor Bond or call and speak with one of our expert surety agents today.