Auctioneers Surety Bonds are surety bonds required by State and Federal Government to protect the consumer from any misconduct. Each state has its own specific surety bond form and the amount of the auctioneer surety bond varies from state to state. The principal is required to provide their respective state’s surety form. An auctioneer bond consists of three parties namely the auctioneer, the obligee and the surety. Auctioneer is the person who purchases the bond, obligee is the one who require the issuance of the bond (in most cases the obligee will be the state or locality) and the company which issues the bond is the surety.
The auctioneer bond protects buyer’s bids and purchases and protects both consumers and the obligee against fraud, substitution of goods and misrepresentation of auction items. The auctioneer license bond assures the recovery of fines, fees, and or expenses, levied by state regulators for non-compliance by the licensee. Customers can recover losses resulting from a licensee’s non-compliance with the state regulations.
Auctioneer bonds are subject to credit approval and the application process includes a credit check and financial analysis to check the financial stability of the auctioneer. The credit score and financial status are graded and if the auctioneer fails to obtain an “excellent” grade, the auctioneer may have to obtain the bond through a special agent or bond company that specializes in sub par credit bonds.
Auctioneer bonds can be purchased through bond selling companies and some insurance companies also.
The amount of an auctioneer’s bond is equal to the penalty the auction house might pay in the event of a claim and is usually between $2,000 and $50,000. Companies charge different costs and a typical annual premium for a $20,000 bond is around $350. The bond is likely to be renewed every two to three years, and the renewal process involves additional credit checks.