ALIA - Associations Liability Insurance Agency, Inc.


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How Does A Surety Bond Work?

A Surety Bond is a contract between three parties; the Obligee (the state appraisal board) - the party requesting the bond; the Principal (the appraisal firm or AMC) - the party performing the contracted service; and the Surety (the insurance company) - the party providing the financial guarantee of the Principal's service to the Obligee. When the Surety issues a bond it is, in a sense, offering a line of financial credit towards the specific contract between the Obligee and the Principal. Should an occurrence arise that falls within the parameters of a payable claim, the Surety will pay the Obligee up to the bond amount. The Surety will then contact the Principal for reimbursement of the claim just as with consumer lines of credit.



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How Does A Bond Protect Me?

When you purchase a Surety Bond it guarantees your contracted performance as a licensee of the state. A Surety Bond provides the state appraisal board the assurance that should your services fail to comply with the state licensing regulations, any fees or monetary penalties levied by the appraisal board will be collectable under the bond. Some states have drafted their legislation to allow for unpaid appraisal fees to also be paid by the bonds. Even if the AMC or appraisal firm fails or goes bankrupt, the Surety will still pay up to the face amount of the bond.



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AMC BONDS

The following states currently require AMC's to carry valid surety bonds:

Arizona: $20,000
Arkansas: $20,000
Georgia: $20,000
Kentucky: $25,000
Missouri: $20,000
Nebraska: $25,000
Oregon: $25,000
Tennessee: $20,000
Washington: $25,000

The following states have pending legislation requiring AMC's to carry bonds:

Alabama: $25,000
Illinois: $25,000
Massachusetts: $20,000
Pennsylvania: $20,000
South Carolina: $25,000