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, or
- Required by court order, or
- Approved by the State Office of Risk Management (SORM).
SORM may approve the purchase of a surety bond if it determines the surety bond is needed due to a substantial or unusual risk of loss, or is necessary to protect the interest of the State.
SORM will determine the amount of bond coverage needed for a state agency, unless the amount is determined by the state constitution or federal law or regulation, or 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.
An annual report must be submitted by the state agency to the governor, the Comptroller’s office, the state auditor, the Legislative Reference Library and the Legislative Budget Board that includes the following 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).