Archive for February, 2013

Surety Bond Bill Legislature for Tennessee in 2013

Written by JoAnn Smith on February 28th, 2013. Posted in Legislation, Non-Construction Contract Performance Bonds, Performance Bonds, Surety Bond Blog, Tennessee

     surety bonds, surety bond, Tennessee surety bonds
Tellico Plains gets a new town charter
There are currently five legislative bills being reviewed in Tennessee’s House or Senate that will have an impact on the use of surety bonds in specific situations or businesses. All five bills are House bills with three of these bills having concurrent Senate bills on the same legislature. The bills primarily deal with the bonding of public officials, when in regards to the creation of a new financial system, town charter for Tellico Plains or the creation of a new marketing authority. It also includes a revision regarding the roles of many public officials. This will be causing changes to a wide number of public officials and the amount of surety bonds required for the position. In addition, there is a school bond measure being considered that will create a scholarship program for both public and non-public schools.    

Tennessee House Bill 63 – Public Officials

If passed this House bill would establish The County Financial Systems Act, a system for financial management for all counties under one system. It would create county finance departments that would each have a director. That director of the county finance department would then be required to post a $100,000 performance bond. This surety bond would be to secure the guarantee of that public official’s faithful performance of their duties as outlined in Tennessee House Bill 63. If the decision was made that the purchasing agent for the county would be someone other than the Director of the Financial Department that individual acting as the purchasing agent would also have to post this surety bond. For a complete reading of Tennessee House Bill 63, please use the link to its legislative site provided in this summary report.  

Tennessee House Bill 75/Senate Bill 540 – Public Officials

When passed House Bill 75 and Senate Bill 540 will have rewritten the town charter for the town of Tellico Plains. This revised town charter will include the stipulation that any officer, employee or agent of the town that either disburses, receives or in any way has custody of the town’s money or handles it in any matter must be bonded by the posting of a surety bond or performance bond. The town may also use a blanket bond to fulfill this stipulation and the town’s council will be charged with the approval of the bond and the sureties involved. House bill 75 has passed its second reading in the House and is currently in review with the House Local Government Committee. Concurrently, the Senate is currently reading Senate Bill 540. For a look at the complete language of Tennessee House Bill 75 as it now stands please follow the link provided for you in this bill summary.  

Tennessee House Bill 100/Senate Bill 135 – Public Officials

When passed House Bill 100 and Senate Bill 135 will make significant changes to the amount of surety bond protection required of public officials in Tennessee. The changes would affect eight distinct different public official groups in regards to their function as a caretaker for public funds. County Trustees, Emergency Communications Districts Board Members, Executive Committee Members, Employees, Officers or other Authorized Persons who receive public funds – A corporate surety bond base of $50,000 for revenues less than $50,000, with that bond amount to increase to 10% of the funds collected for revenues between $50,000 and $500,000. For revenues of $500,000 to $1 million, an increase of an additional 5% of the additional revenue must be added. Revenues of between $1-3 million will see an increased bond amount equal to 3% of this additional revenue, and revenue over $3 million increases the bond another 2% of the revenue amount that exceeds $3 million. Bond scale is cumulative for all amounts. Board Members, Policy Council Members, Employees, Officers or any Authorized Persons of a human resource agency who receive public funds – Bond amount is changed from “reasonable amount as determined” to equal to 4% of the fund collected up to a public fund amount of $3 million. For funds beyond this amount, a 2% additional amount will be added, with the scale of the surety bond amount to be cumulative. County Mayors – The bond amount would be changed from a sliding scale according to the population to a simple $100,000 surety bond for each mayor. The county legislature can require a larger amount if they deem it necessary. Sheriffs – The surety bond amount would be increased from the current $25,000 to $100,000. Registers – If the county has a population of less than 15,000 the surety bond amount would be $50,000 and if the county has a population of more than 15,000 the surety bond will go up to $100,000. County Director of Accounts and County Purchasing Agents – New surety bond amounts will be a minimum of $100,000. County Director of the Finance Department – Changes were made to require a $100,000 public official surety bond and to require a blanket bond to cover both the Director and their employees. Clerk of the Court – For counties with a population of under 15,000 a surety bond of $50,000 is required and if the population exceeds 15,000 the surety bond amount would increase to $100,000. In addition, any county official authorized to administer state-shared funds will need a $100,000 surety bond with the county legislature having authority to increase the bond amount required as they see fit. Also, blanket surety bond coverage for all county employees not covered by these individual surety bonds will need to be in place from county governments with a minimum amount of $150,000. House Bill 100 was introduced into the House on January 25, 2013 and is currently under review with the Local Government Subcommittee of the State Government Committee of Finance. To read the entire Tennessee House Bill 100 as it now stands, please feel free to use the link provided in this overview of the bill.  

Tennessee House Bill 190/Senate Bill 196 – School Bonds

The introduction of House Bill 190 and Senate Bill 196 is to create The Tennessee Choice and Opportunity Scholarship Act, a scholarship program with a school voucher measure. It will allow non-public schools to also participate providing they can demonstrate their financial viability with a surety bond. The Department of Education will determine the amount of the bond to be posted that will help them to meet the requirement for participation in the measure. This bill has passed the second reading and is currently in review with the Senate Education Committee. For a full reading of Tennessee House Bill 190 and Tennessee Senate Bill 196 please follow the provided link to a legislative website.      

Tennessee House Bill 479 – Public Officials Bonds

This bill will establish the Cumberland Regional Business and Agribusiness Marketing Authority. With the creation of this authority will be the appointment of a board of directors. This board of directors will be authorized to appoint managers, officers, employees, attornies and agents as they see fit. All of these positions will be required to post a surety bond. House Bill 479 was introduced into the House on January 30, 2013 and is currently in review with the State Government Committee’s subcommittee on Government Operations. For anyone interested in a reading of the complete Tennessee House Bill 479 as it currently stands, please be sure to follow the link we have created in this bill review.

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Allied World Insurance to Expand into Surety Bond Market

Written by JoAnn Smith on February 27th, 2013. Posted in Commercial Bonds, Contract Bonds, Latest News

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Bonds Build Trust
February 27, 2013 – Clients in the U.S. will now be able to access surety bonds from the casualty operations department of Allied World Assurance Company beginning today. This new line of surety products will include contract and commercial bonds as well as environmental surety bonds. The surety bonds will be available as either a stand-alone product or can be purchased in tandem with Allied’s environmental insurance products. Although a credit analysis will allow for higher limits, the company has stated that the line will be targeting accounts within the middle-market range of $20 million per single contract with the possibility of a $50 million aggregate surety bond program. For more information on this new development for Allied World Insurance, be sure to read the full story here.

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Contract and Commercial Surety Bond Legislature in Missouri

Written by JoAnn Smith on February 27th, 2013. Posted in License and Permit Bonds, Missouri, Performance Bonds, Surety Bond Blog

   
State Seal for Missouri
There were a total of four bills that were passed this past legislative session that dealt with the posting of various surety bonds. Four of these bills were passed in the House and one was passed in the Senate for the State of Missouri. The Senate bill, which also passed as stated in the House dealt with the posting of a surety bond as part of a licensing requirement for three day special event motor vehicle auctions. The House passed a bill changing the requirements of a bond posted by a private school. It also passed two bills that dealt with the requirements for public officials to post bonds related to their taking office. There were no contract surety enactments in 2012 in the State of Missouri.  

Senate Bill No. 470/House Bill No. 1402: Permit Bond

Missouri Senate Bill 470 and House Bill 1407 were passed to regulate the holding of special event motor vehicle auctions that take place over the course of three calendar days. The events will now be required to be licensed, with a separate license to be needed for each separate event. An event promotion surety bond will need to be posted as part of the licensing requirement, although an irrevocable letter of credit can be used in lieu of the surety bond. The bond will be conditional to compliance of this law and to indemnify for losses that result should there be violations of these provisions. The total liability of the bond posted will be limited to the amount of the bond. The bills were enacted on July 12, 2012 and became effective ninety (90) days after the adjournment of the House and Senate. For a look at the complete Senate Bill 470 and the House Bill 1402, be sure to use the links provided.  

House Bill No. 1042: School Bond

House Bill 1042 makes changes to the current requirements regarding the posting of private school surety bonds for proprietary schools. Before the passing of House Bill 1042, these schools were required to post a bond that would be either a minimum of $5,000 or equal to 10% of the preceding year’s gross tuition, with the bond amount to be whichever amount was greater. This is still in force; however the previous cap of $25,000 has been increased to $100,000. This bond amount is also required to cover all the facilities and locations of the school. House Bill 1042 was enacted on June 07, 2012 and will go into effect ninety (90) days after the Missouri House adjourns. For a reading of the entire House Bill 1042 please use the link provided to a legislative reporting site.  

House Bill No. 1106: Public Officials

Missouri’s House Bill 1106 concerns candidates for any county public office. It will require that all candidates must first acquire a certification from a surety company regarding their ability to post a public official surety bond.  This certification will state that if elected the candidate will be able to post the surety bond required for the office for which they are running upon election. House Bill 1106 was enacted on July 10, 2012 and went into effect as law ninety (90) days after the Missouri House was adjourned. For anyone who wishes to read House Bill 1106 in its entirety we have a link provided to the full text of the bill.  

House Bill No. 1659: Public Officials

Missouri’s House Bill 1659 was enacted to allow the City of Kansas City the ability to create a land bank agency for the management, transfer and sale of tax delinquent land. When the agency is created, the members of the agency’s Board of Commissioners will be required to post a public official surety bond. House Bill 1659 was enacted on July 10, 2012 and went into law effective ninety (90) days from the date that the Missouri Legislative House adjourned. For a full reading of the complete text to House Bill 1659 please follow the link provided.

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Why Pennsylvania Construction Firms Need Performance Surety Bonds

Written by JoAnn Smith on February 27th, 2013. Posted in Pennsylvania, Performance Bonds, Surety Bond Blog

    
Is Your Construction Site Safe?
There has been quite a bit of discussion in the construction industry regarding liability issues. The question often focuses on whether a contractor really needs to take out a performance surety bond to protect against lawsuits stemming from faulty work on a job. While it is true that in many places it might make sense for a construction company to use insurance for something like this, not every state allows this. One state that has made it clear that they will back up an insurance company for saying they will not cover problems with faulty construction is Pennsylvania.

Recent Case Illustrates Need for Surety Bond Protection

A case that has been before the courts since 2007 and was only recently decided ended in the judge deciding that the two insurance companies who had policies with a local builder for defense and indemnity coverage were not liable to pay costs. This was because it had been made clear that the insurance coverage is for “accidental damage” only. But since it was not an accident that caused the damage but rather faulty construction, they were not liable because in the state of Pennsylvania there has been precedence to show that:
the court held there is no legal avenue for coverage for property damage that was caused by faulty workmanship.
This case makes it clearly a problem for any builder or construction company to use their insurance as protection from these types of lawsuits. This is where taking out a performance surety bond against defective workmanship can be the smartest thing that any contractor can do.

Protection is Better Than Hindsight

Construction is a hard job in the best of circumstances. The possibilities of some unforeseen problem, such as the developing problem with ground-settling in the case mentioned above, is the kind of situation that you want to nip in the bud before it turns into a huge lawsuit. Sometimes even all your best efforts cannot protect you against an unforeseen construction problem. Your best defense against a lawsuit or any other legal action in Pennsylvania is to take out a bond for protection against these types of problems.

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Contract and Commercial Surety Bond Legislature Update for New Jersey

Written by JoAnn Smith on February 27th, 2013. Posted in New Jersey, Surety Bond Blog

     new jersey
Don’t You Wish You Were in New Jersey?
New Jersey is one of the few states that is on a two-year legislative track and so continues to be in session while other legislative houses are closed. This has resulted in a very busy year. There were three Senate bills and four Assembly bills that either were passed or were in process as of December 2012 that included the requirement of a surety or fidelity bond.   Senate bills were passed that require bonds from off track betting agencies and elevator mechanics along with a proposed bill that will require a bond from public works contractors. Assembly bills regarding debt-management services, contractors who provide home improvement, certain government officials and community managers were either passed or in the process and currently with various committees as of December 2012.  

Senate Bill No. 3185 – License Bonds for Off-track Wagering Facilities

New Jersey Senate Bill 3185 establishes a requirement for any off-track wagering facility that holds a licensed permit either on the date or after the date that the new law is passed to produce either a cash deposit, post a surety bond or provide an irrevocable letter of credit. These financial documents will need to be posted within 180 days of the date the law becomes effective and in the amount of $1 million.   They will be required to have the bond in place for one year for the purpose of securing the license. In addition they must be showing considerable advancement towards establishing share facilities as part of the agreement for licensing. If the holder of the license is considered compliant the bond amount will be returned, but if not compliant then the bond amount will be surrendered. Senate Bill 3185 was enacted and became law on January 17, 2012. You can read a full view of the entire Senate Bill 3185 at the link provided.  

Assembly Bill 3392 – Licensing Bonds for Debt-Management Service Providers

New Jersey Assembly Bill 3392 has been introduced and is currently referred to the Assembly Financial Institutions and Insurance Committee as of December 2012. If passed, it will require the posting of a license or permit surety bond by debt-management service providers. The amount to be posted would be determined by regulation of the Commissioner of Banking and Insurance based upon specific conditions of the licensee. The bond would be to assure that the debt-management provider maintains sureties with an “A-“ rating or equivalent, that they must be licensed in the State of New Jersey and that the surety rating is from a nationally accepted rating service. To read Assembly Bill 3392 as it currently stands, please be sure to follow the link provided here.  

Senate Bill 612 – Contractors License Bonds

New Jersey Senate Bill 612 allows the Elevator, Escalator and Moving Walkway Licensing Board to require the posting of a licensing bond from elevator mechanics. The amount will be determined by the licensing board and with the enactment of this bill municipalities will be barred from requiring any similar kind of surety bond from elevator mechanics. The surety bond will be part of a license for mechanics that service, repair, install or otherwise alter, maintain, construct or test escalators, elevators and moving walkways in the State of New Jersey. Senate Bill 612 recently was passed by both chambers and was approved on December 3, 2012 and will take effect immediately. For a full reading of the complete text of Senate Bill 612 please use the link provided here.  

Assembly Bill 2846- Contractors Registration Act

If passed, New Jersey Assembly Bill 2846 will require the posting of a contractor’s license bond or other security from all registered contractors who plan to provide home improvements. The bond would need to be in the amount of a minimum of $50,000 and be issued by a surety company that is authorized for the State of New Jersey. The bond would also be in effect during the entire period of registration. The bond is to cover the cost of any loss or damage suffered by a consumer due to the contractor’s violation of applicable state law.  The bond will be exempt from the Consumer Fraud Act’s provisions for treble damages and instead will only cover liabilities that do not exceed the bond’s amount of coverage. New Jersey Assembly Bill 2846 was introduced on May 10, 2012 and is currently with the Regulated Professions Committee of the Assembly as of December 2012. To see the current version of Assembly Bill 2846 please follow the link provided.  

Assembly Bill 1968 – Blanket Bonds for Government Officers

New Jersey Assembly Bill 1968 permits the issuance of public official surety bonds through a surety blanket bond for municipal officers to now include municipal court judges as well as administrators, tax collectors and municipal treasurers. This replaces the earlier law that required these government officers to obtain blanket bonds from a state joint insurance fund. The bill was passed on November 29, 2012 and went immediately into law. For those wishing to read the full text of Assembly Bill 1968 you can find it in the link provided.  

Senate Bill 2287 – Public Works Contractor Apprenticeship Wages

New Jersey Senate Bill 2287, if passed, will require that contractors that are engaged in certain public work meet the requirement that workers be employed at the prevailing wage requirements. It also requires that such workers have completed and have proof of a registered apprenticeship. An exception would be made for any contractor if they can certify that every worker is being paid at the minimum of the highest journey worker’s rate for any established apprenticeship trade. Current laws require the posting of a contractors surety bond to cover liabilities for excess costs if a contract were to be terminated due to the contractor failing to pay the prevailing wage. This bill is currently in the Senate Labor Committee as of December 2012. For a look at the bill as it now stands you can follow our link provided.  

Assembly Bill 2658 – Community Managers Fidelity Bonds

If passed, this bill would require that management companies or community associations take out a fidelity bond for their community managers who control, collect, disburse or have access to funds of the community association. The Director of the Division of Consumer Affairs would establish the bond amount through the imposition of regulations. Bond issuance companies for this fidelity bond would have to be authorized to do business in the State of New Jersey. This bill was introduced in March of 2012, passed the Assembly in June and is currently with the Senate Commerce Committee as of December 2012. Anyone who is interested can take a look at the full text of Assembly Bill 2658 as it now stands.

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