A surety bond is a type of “guarantee” that obligates an individual to uphold her end of an employment agreement with your company. As part of a treasurer's employment contract, she agrees to operate in a manner that is honest and integral. If the treasurer violates that agreement, the bond holds her accountable for restitution and legal expenses. In a bond agreement, the treasurer is referred to as the “Obligee.” Your company is referred to as the “Principal.”

Type of Treasurer

Whether or not a treasurer needs to be bonded all depends upon the capacity of his office. In most cases, if an individual is appointed or elected to serve as treasurer for a state, county or federal government agency, he must be bonded. Otherwise, there are no laws requiring the bonding of treasurers. It is still wise to bond a treasurer, even when the law does not require it.

Advantages of Bonding

If you operate a nonprofit organization, a bonded treasurer adds assurance to an investor or donor that her money is safe with your company or organization. Regardless of organizational structure, bonding the treasurer protects your company's money. If the treasurer mishandles the money in any way, the bond is a guarantee that your company will receive restitution up to the amount of the bond.

How Much

If the treasurer serves in a state, county or government capacity, his bond must be equivalent to the law requirements of his state. Otherwise, the bond amount is determined by the company's managers, members or board of directors. Some companies require a bond equivalent to at least 10 percent of the liquid assets the treasurer is responsible for handling. The cost for a surety bond averages around 1 to 3 percent of the bond value, payable in monthly premiums.

Getting a Bond

In some cases, the agency pays for the bond. Otherwise, the treasurer must purchase his own bond. The company may desire a “position bond” for the treasurer or an “individual” bond. A position bond is not limited to a specific individual. It insures the treasurer position, regardless of the appointed treasurer. An individual bond only bonds one specific individual. To obtain a bond, contact an insurance company that offers surety bonds.