What is a Cost Bond?
A Cost Bond is a type of surety bond that guarantees payment of court expenses. Usually Cost Bonds are required by plaintiffs who file action within a state that they do not live in, though some states may require a cost bond for state residents as well.
When you get a Cost Bond, you are promising payment for litigation expenses. Litigation expenses include court fees, attorney fees, copy fees, deposition fees, computer legal research services, paralegal fees, private investigation fees, costs in obtaining medical or government records, and on and on. The list can be long, depending on your case.
When you get a Cost Bond you are guaranteeing you will pay for all of these expenses when the case is through. If you fail to do this, the Court can make a claim against your bond.
How Much Does a Cost Bond Cost?
The amount of a Cost Bond is normally very small (under $500). Your bond amount will depend on the state that you are in.
The amount you pay for your bond (called the bond premium) will depend on your personal credit history and the type of legal action that is being taken.
People will good credit history (over 700) can expect to pay closer to 1-4% of the total bond amount. Those with not-so-perfect credit will have to pay more.
Collateral for this might might be required by the surety company. If collateral is required depends on the amount of the Cost Bond and the requirements of the surety company the bond is written through.
How to get a Cost Bond
Cost Bonds are rated low on the hazard code scale, meaning the underwriting is not as hard as other bonds. In fact, Cost Bonds are often freely written for financially qualified applicants.