Learn more about funeral home bonds, and apply today. Absolute Surety offers surety bonds nationwide through a convenient online application system.
What Are Funeral Bonds?
Many people want to relieve their family members of the responsibility for making funeral arrangements at a time when they are dealing with the stress of losing a loved one. Planning their own funeral and pre-paying for it accomplishes that goal and also ensures that the funeral will be handled in accordance with their own wishes and instructions, not someone else’s.
Making preneed funeral arrangements solves some problems. But because it involves pre-paying funeral expenses, potentially many years in advance of incurring any actual costs, it raises some trust issues. Preneed funeral bonds are designed to address those issues. They are intended to protect consumers against potential financial loss due to the actions of a funeral home or related business that has contracted to provide prepaid funeral services at the time of the individual’s death.
Who Needs Them?
Many states require funeral homes to obtain a funeral bond as a condition of offering pre-arranged funeral services. The funeral home is the principal, and the state is the obligee. In states that do not require preneed funeral bonds, many funeral homes purchase them anyway to give consumers the confidence to enter into a preneed funeral contract.
How Do They Work?
The funeral home applies for the bond in the amount mandated by the state. The bond represents the funeral home’s pledge to the state that it will operate in accordance with the terms of the bond. Those terms typically specify abiding by all applicable rules and regulations regarding preneed funeral contracts. This includes carrying out the deceased’s wishes as documented in the contract and to handle the prepaid funds appropriately. Any failure to provide the specified services (e.g., if the funeral home goes out of business before the consumer’s death) or any misappropriation of funds can result in a claim against the funeral bond.
What Happens In The Event Of A Claim?
The surety company will assess the claim and determine whether it is valid. If the claim is found to be valid, the surety will make payment up to the total bond amount for the financial loss or damages resulting from the breach of contract or misappropriation of funds. The funeral home is then responsible for repaying that amount to the surety company.
A funeral bond is more than a promise. It’s a guarantee that a funeral home will faithfully execute a preneed funeral contract when the time comes and will not misuse the pre-paid funds. Consumers are protected, and the state cannot be held liable for any breach of contract or unethical behavior on the part of a funeral home it has granted a license to.
How Much Do They Cost?
The bond company (the surety) determines the premium rate the funeral home will pay, based on an assessment of its credit history and financial condition. Principals with good credit will typically pay a premium of 2%-5% of the bond amount.
Use our convenient online system to apply for a preneed funeral bond today.