An agriculture dealer is a person that conducts business of buying, receiving, soliciting, negotiating, or handling agricultural products from producers or their agents. Products include livestock, vegetables, fruit, hay, grain, etc. This license and permit bond is required by many governmental jurisdictions.
The three parties of this bond include the obligee, the principal, and the surety company. The obligee is the state or federal government that is requiring the principal to be bonded. The principal is the agricultural dealer that must be licensed and bonded. The surety company is the party that underwrites and ensures the bond.
The bond guarantees the producers receive legal and correct accounting for their products as well as payment from the dealer for their products. With this bond, the suppliers are promised payment and the consumers are promised and a reasonable supply of goods.
The bond acts as a contract of agreement between the principal and the obligee, stating that the principal will not make any fraudulent sales or fraudulent statements about the grade, makings, and quality of the products.
Each state (the obligee) sets their own bond form and bond requirements. If the principal acts against the bonding requirements, the obligee can revoke the business license and cancel the surety bond. The obligee (state government) sets the bond amount and all requirements for the bond, not the surety company.
Since each state has its own bonding and licensing requirements, it’s a good idea for the principal to be informed on all requirements before applying for a bond. All requirements are to the state and federal government’s favor, since the bond ensure the obligee will be protected from harm. Consumers are also legally protected against fraudulent actions of the agriculture dealer.
The cost for the bond is also referred to as the bond premium. The bond premium is the one cost that the surety company sets. All other fees that are related to the bond are set by the obligee. The bond premium is only a small percentage of the bond amount.
The bond amount is set by the obligee, not the surety company. A bond amount is the amount of coverage the surety company will pay out to the state or federal government if a claim is filed against the bond. Business activity is regulated by the bond amount.
For example, the state of Florida sets the bond amount at $5,000-$100,000 for a Florida Agricultural Dealer surety bond. The minimum amount is $5,000 and the maximum amount the bond can go up to is $100,000. The Florida bond amount is determined by the month the highest volume of agricultural products were bought or handled.
To find out the state specific renewal dates and length of bond validity, the principal can contact the state government in which the business license is filed under. This bond type is usually valid for one year and must be renewed in order for it to remain valid.
Surety Solutions Insurance Services, Inc. (Surety1) has been providing surety bonds nationwide since 2003. With our easy to navigate, online application, you can apply in minutes and have an approval usually within 1 business day.