Learn more about yacht broker bonds, and apply today. Absolute Surety offers surety bonds nationwide through a convenient online application system.
What Are Yacht Broker Bonds?
Some states require people who sell yachts and ships to obtain a business license. Purchasing a license and permit bond is typically a part of the licensing process. Yacht broker bonds protect purchasers against financial loss stemming from the unlawful or unethical acts of a bonded yacht broker or salesperson, such as the misappropriation of a customer’s deposit.
Who Needs Them?
There are some states that require a license but not a bond. In the states that require a bond as a condition of licensing, yacht brokers and salespersons must purchase the bond, with the amount specifying the required amount. In states that don’t require bonding, people involved in selling yachts and ships will often choose to purchase a yacht broker bond anyway to assure potential customers that they operate in a lawful and ethical manner.
How Do They Work?
As with any other license bond, there are three parties to the agreement: the obligee (the party requiring the bond), the principal (the yacht broker or salesperson purchasing the bond), and the surety (the company underwriting and issuing the bond). When required as a condition of licensing, the bond must remain in force in order to maintain a valid business license, which typically means it must be renewed annually.
A customer who alleges a financial loss attributable to something the principal did or failed to do can file a claim against the bond. If, upon investigation, the surety finds the claim to be valid, the surety will make payment to the claimant, up to the full bond amount. It’s then the principal’s legal obligation to reimburse the surety for that amount.
What Do They Cost?
The surety will set the premium rate for each applicant. This is the percentage of the bond amount that the principal will pay as the premium. That rate will be based on the applicant’s credit score and the surety’s assessment of the risk of claims against the bond. It can be anywhere from 1% of the bond amount to 15%, depending on the applicant’s credit score.
Use our convenient online system to apply for a yacht broker bond today.