Miscellaneous Bonds generally do not fit into any traditional category. Such as fiduciary or court bonds. Therefore, they have no distinct identifying characteristics.
Miscellaneous bonds are usually purchased by companies or individually working professionals who need surety bonds for purposes. Which are typically unrelated to legal issues, construction projects or other similar contracted work. As such, most kinds of miscellaneous bonds are used to reinforce laws. Such as license and permit regulations. They are less risky for insurance companies to underwrite than contract and court bonds. That is why they are comparatively easier for most individuals to qualify for.
Workers’ Compensation Self-Insurers Bond
Workers Compensation laws, either at the state or federal level. Require the business owners to compensate employees who might get themselves injured while on the job. An employer may comply with these laws by purchasing insurance. Or self-insuring by posting a workers compensation bond to guarantee payment of benefits to employees. This is a hazardous class of commercial surety bond because of its ‘long-tail’ exposure and potential cumulative liability. The ‘long-tail’ exposure originates from the two statutory bond forms:
Traditional Bond Form
For those who avail Traditional Bond, the surety is liable for payment of the principal’s workers’ compensation obligations. Which might occur during the time the bond is in force. When the bond is canceled, the surety continues to have liability for all workers’ compensation claims. Which may have been incurred between the effective date of the bond and the cancellation date of the bond. That is one of the reasons these are mostly considered a safe investment.
Surety on Bond Form
The surety assumes all past, present and future liability to pay the principal’s self-insurers workers’ compensation obligations. The surety is released from all accrued liability if the surety cancels the bond and the principal later posts an acceptable replacement security.