Surety Bonds
The purchase of a surety bond may help a state agency offset the cost of a dishonest act by an employee or an employee’s failure to perform duties of their position. A state agency may only purchase a surety bond for a state officer or employee if it is:
- Required by the Texas Constitution or federal law or regulation
- Required by court order
–or– - Approved by the State Office of Risk Management (SORM)
SORM determines the amount of bond coverage needed for a state agency, unless the amount is determined by:
- The state of Texas constitution
- A federal law or regulation
–or– - A court order
A surety bond must be on a form approved by the Commissioner of Insurance and purchased from an insurance company authorized to issue surety bonds in Texas.
Bonds must be written in triplicate originals with:
- One original filed with the Secretary of State
- One original filed with the Comptroller’s office
–and– - One original kept by the agency covered by the bond
The state agency must submit an annual report to the:
- Governor’s office
- Comptroller’s office
- State Auditor’s office
- Legislative Reference Library
–and– - Legislative Budget Board
The submitted annual report must include the following information for each bonded employee:
- Name
- Job title
- Surety bond amount
- Name of the surety company
Documentation Requirements [+]
- A state agency must retain documentation in its files that provides the following information: type of bond purchased, the value of the bond, the name of the person covered and the position held by that person.
- Comptroller object 7205 must be used, and online approval is required by the State Office of Risk Management.
Sources [+]
Texas Government Code, Sections 653.002-653.005, 653.007-653.009; Texas Insurance Code, Section 31.007; Texas Government Code, Section 2101.0115 (a), (c)(1).