Funeral Bonds

At Surety Bonds Agent, we offer a full range of surety bonds nationwide through an extended carrier network. Continue below to learn more about funeral bonds and request a quote. If you have additional questions or want to explore bonding solutions for your business, speak with one of our knowledgeable surety bond agents today.

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FREE FUNERAL BOND QUOTE

What Are Funeral Bonds?

Funeral bonds, also known as pre-need funeral bonds, are a type of financial guaranty surety bond. They guarantee that money paid in advance for pre-arranged funeral services will be used for that purpose, even though that could be many years in the future. A funeral bond also serves as the promise of a funeral home owner that prepaid funeral arrangements will be carried out in accordance with the individual’s wishes.

Misappropriation or mishandling of funds or other violations of the terms of the funeral bond agreement can result in a claim being filed against the bond for any resulting financial loss. A funeral bond legally obligates the funeral home owner to pay any and all valid claims.

Who Needs Them?

Not all states require funeral home owners to purchase a funeral surety bond. However, many states do. If you operate a funeral home in one of those states, you’ll have to purchase a funeral bond before you can offer pre-arranged funeral services. The bond protects the state from liability for having issued you a license to operate a funeral home and offer pre-need funeral arrangements. It also protects those who purchase such prepaid arrangements (or their heirs) against financial loss due to your unlawful or unethical actions.

Even if your state does not require a funeral bond, it can be a good idea to buy one if you plan to provide pre-need funeral arrangements. Being bonded tells the public that you can be trusted to honor their wishes when the time comes and that it is safe to entrust you with their money in the meantime. That level of trust can be a significant competitive advantage in marketing prepaid funeral arrangements.

How Do They Work?

The surety bond agreement for a funeral bond is a legally binding contract. In states where funeral bonds are mandatory, there are three parties to the contract:

  • The state agency requiring the bond and establishing the required bond amount is known as the “obligee,”
  • The funeral home owner purchasing the bond and legally obligated to pay valid claims is the “principal,” and
  • The company underwriting and issuing the bond is called the “surety.”

In states where purchasing a funeral bond is voluntary, the obligee and the principal are one and the same—the owner of the funeral home. 

In issuing a funeral bond, the surety is promising to extend credit to the principal in the event that it’s needed to pay a valid claim. The usual practice is for the surety to pay the claim on behalf of the principal, which creates a debt that the principal must repay to the surety, which often can be done in installments. Thus, the claimant receives prompt payment and the principal is not required to come up with a large sum of money in one lump sum. 

What Do They Cost?

The surety takes on a certain amount of risk in issuing a funeral bond. The risk is that the principal won’t repay the surety for the credit extended in paying a claim. Consequently, the biggest factor the surety considers in determining the cost of a funeral bond is the principal’s creditworthiness. A principal with a good personal credit score will likely pay a premium in the vicinity of 1% to 3% of the required bond amount. Those with poor credit may pay a higher rate.

At Surety Bonds Agent, we offer a full range of surety bonds nationwide through an extended carrier network. Continue below to learn more about funeral bonds and request a quote. If you have additional questions or want to explore bonding solutions for your business, speak with one of our knowledgeable surety bond agents today.

CONTACT US FOR A

FREE FUNERAL BOND QUOTE

What Are Funeral Bonds?

Funeral bonds, also known as pre-need funeral bonds, are a type of financial guaranty surety bond. They guarantee that money paid in advance for pre-arranged funeral services will be used for that purpose, even though that could be many years in the future. A funeral bond also serves as the promise of a funeral home owner that prepaid funeral arrangements will be carried out in accordance with the individual’s wishes.

Misappropriation or mishandling of funds or other violations of the terms of the funeral bond agreement can result in a claim being filed against the bond for any resulting financial loss. A funeral bond legally obligates the funeral home owner to pay any and all valid claims.

Not all states require funeral home owners to purchase a funeral surety bond. However, many states do. If you operate a funeral home in one of those states, you’ll have to purchase a funeral bond before you can offer pre-arranged funeral services. The bond protects the state from liability for having issued you a license to operate a funeral home and offer pre-need funeral arrangements. It also protects those who purchase such prepaid arrangements (or their heirs) against financial loss due to your unlawful or unethical actions.

Even if your state does not require a funeral bond, it can be a good idea to buy one if you plan to provide pre-need funeral arrangements. Being bonded tells the public that you can be trusted to honor their wishes when the time comes and that it is safe to entrust you with their money in the meantime. That level of trust can be a significant competitive advantage in marketing prepaid funeral arrangements.

The surety bond agreement for a funeral bond is a legally binding contract. In states where funeral bonds are mandatory, there are three parties to the contract:

  • The state agency requiring the bond and establishing the required bond amount is known as the “obligee,”
  • The funeral home owner purchasing the bond and legally obligated to pay valid claims is the “principal,” and
  • The company underwriting and issuing the bond is called the “surety.”

In states where purchasing a funeral bond is voluntary, the obligee and the principal are one and the same—the owner of the funeral home. 

In issuing a funeral bond, the surety is promising to extend credit to the principal in the event that it’s needed to pay a valid claim. The usual practice is for the surety to pay the claim on behalf of the principal, which creates a debt that the principal must repay to the surety, which often can be done in installments. Thus, the claimant receives prompt payment and the principal is not required to come up with a large sum of money in one lump sum. 

The surety takes on a certain amount of risk in issuing a funeral bond. The risk is that the principal won’t repay the surety for the credit extended in paying a claim. Consequently, the biggest factor the surety considers in determining the cost of a funeral bond is the principal’s creditworthiness. A principal with a good personal credit score will likely pay a premium in the vicinity of 1% to 3% of the required bond amount. Those with poor credit may pay a higher rate.

REQUEST A QUOTE

Request a quote online or call today to speak with one of our surety bond experts about obtaining a funeral bond so that you can offer pre-need funeral arrangements to the public.