Outdoor Advertising Surety Bonds
As most people drive down the road, occasionally glancing at billboards along the way, the last thing they probably consider is the legalities of outdoor advertising. However, if you’re involved in the outdoor advertising business, are a business owner, or are a state employee who deals with transportation or advertising issues, the issue of outdoor advertising surety bonds is a very relevant one.
Surety bonds are a critical component of a wide variety of industries, from construction to medicine, janitorial work and used car sales. These bonds are generally executed between two parties (the guarantor and the guarantee) and are issued by a company which specializes in bond sales or, less frequently, an insurance company. Surety bonds are typically paid for by the guarantor and benefit the guarantee.
In the case of outdoor advertising, billboard companies who sell advertising space are required to pay for and maintain a surety bond which benefits the state in which they operate. The bond ensures that each billboard company who carries one will adhere to the state transportation department’s rules and guidelines for appropriate construction, placement, adjustment, and removal of advertising signs and billboards on the sides of highways, roads, and other public areas. Should the company be found in default of the state’s laws regarding advertising placement, the state can file a claim on the bond and receive up to the full face value of that bond, depending on the degree of negligence or misconduct and the subsequent damage.
Bond requirements and amounts vary from state to state, but outdoor advertising companies are usually required to be bonded for around $1,000. The actual cost to the company for the outdoor advertising bond varies greatly, depending in a large part on the credit status of the business who purchases the bond. Regardless of where the bond is purchased, potential guarantors will be subject to an extensive credit check and financial survey to ensure that they are financially able to pay the full value of the bond should there be a claim filed against it.
If the agent or agency has poor credit, there are companies who specialize in high risk bonds. Additionally, the Small Business Administration has a program designed to help smaller companies become bonded and may be able to help with finding information regarding the bonding process or may even be able to underwrite a bond itself should your company qualify for assistance. For more information on the SBA, please visit www.sba.gov
