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These surety bonds are general for all states.
Learn more about financially responsible officer bonds, and apply today. Absolute Surety offers surety bonds nationwide through a convenient online application system.
First, it’s important to understand what the term “financially responsible officer (FRO)” means. An FRO is the person with primary responsibility for carrying out a company’s financial responsibilities. Some states require FROs to be licensed and to obtain a type of license and permit surety bond known as a financially responsible officer bond.
This bond designates a specific individual to be held responsible for ensuring that an organization’s accounting and financial practices are both lawful and ethical. It also guarantees that all of the company’s other fiduciary responsibilities are carried out in a lawful and ethical manner and that all necessary paperwork will be provided to the relevant authorities. An FRO bond is the FRO’s pledge to uphold financial compliance. It is intended to protect the state licensing agency and the public.
Only a few states require FRO bonds. For example, Florida’s Department of Business and Professional Regulation requires this type of bond bond when a contractor uses their license to qualify another construction business but won’t be actively involved in that business and doesn’t want to have financial responsibility for any fines or fees it incurs. Someone else, typically the owner of the second business, will be designated as its FRO and will need to obtain an FRO license and bond.
The state licensing agency requiring the bond is the obligee, the FRO is the principal, and the company issuing the bond is the surety. The FRO guarantees payment of any fines or fees the business incurs as a result of a financial accounting or reporting practice or infraction of fiduciary regulations that is determined to be unlawful or unethical.
The surety will pay any fines or fees the obligee claims against the bond. However, the principal must repay that amount to the surety.
The obligee establishes the state’s required financially responsible officer bond amount. The surety determines what percentage of that bond amount a given applicant will pay as a premium. The key considerations in setting the premium rate for any applicant are the applicant’s personal credit history, business finances, and other details that help in assessing the risk of issuing an FRO bond to that individual.
The better the applicant’s credit score, the lower the premium. People with good credit typically pay a premium rate of 4% or less. People with poor credit may pay as much as 15%.
Use our convenient online system to apply for an FRO bond today.
