Delaware clarifies surety bond requirement for preneed funeral contracts

The Delaware State Bank Commissioner has revised the existing regulations for preneed funeral contracts. Previous regulations required a surety bond or an irrevocable letter of credit to secure the funds held in a trust fund for preneed funeral contracts. The amount of the bond is based on the amount of funds held in the trust fund and ranges from $50,000 to $200,000.

The revised regulations clarify that the maximum bond amount is $200,000. The revised regulations also make a technical change to the requirement for the bond to be reviewed on an annual basis by eliminating the specified date on which the review must take place.

Effective August 11, 2014, “Each licensee shall file with the State Bank Commissioner (the “Commissioner”) an original corporate surety bond or an irrevocable letter of credit in a form satisfactory to the Commissioner in accordance with
5 Del.C. §3411. The minimum amount of the surety bond or irrevocable letter of credit is based on the factors identified in that section.”

“Each licensee shall obtain a surety bond or irrevocable letter of credit based upon the maximum dollar value of the trust funds it held as a trustee during the twelve month period ending October 31 that precedes the calendar year for which the bond or irrevocable letter of credit is effective. A licensee who obtains a surety bond that is effective for more than one year or an irrevocable letter of credit shall annually review the amount of the surety bond or letter of credit, to ensure that the minimum required amount is maintained. The minimum required amount of the surety bond or irrevocable letter of credit shall be maintained according to the following”:

  • $50,000 surety bond or irrevocable letter of credit required for licensees who hold a maximum of $50,000 in dollar value of trust funds
  • $75,000 surety bond or irrevocable letter of credit required for licensees who hold $50,001-75,000 in dollar value of trust funds
  • $100,000 surety bond or irrevocable letter of credit required for licensees who hold $75,0001-100,000 in dollar value of trust funds
  • $125,000 surety bond or irrevocable letter of credit required for licensees who hold $100,001-125,000 in dollar value of trust funds
  • $150,000 surety bond or irrevocable letter of credit required for licensees who hold $125,000-175,000 in dollar value of trust funds
  • $175,000 surety bond or irrevocable letter of credit required for licensees who hold $150,001-175,000 in dollar value of trust funds
  • $200,000 surety bond or irrevocable letter of credit required for licensees who hold a minimum of $175,001 in dollar value of trust funds

“Subject to the $200,000 cap, the Commissioner may require a licensee to obtain a larger surety bond or irrevocable letter of credit based upon the licensee’s individual circumstances.”

By posting a Delaware preneed funeral contracts surety bond, principals (licensees) pledge to faithfully comply with all provisions of Chapter 34, Title 5 of the Delaware code and all regulations adopted thereunder. If the principal fails to comply with these terms, the bond protects the state from financial loss that occurs as a result of the licensee’s wrongful acts, fraud, default or misrepresentation while on the job up to the full penal sum of the bond. The principal will reimburse the surety for damages paid out. Although these bonds are continuous in nature, licenses expire annually on December 31.

Visit the State of Delaware’s Office of the State Bank Commissioner’s website to access the surety bond form and for more information about this bond requirement.

The SuretyBonds.com experts are familiar with this surety bond requirement and are on call to answer your questions and to help you purchase the surety bond you need quickly and easily. Give us a call at 1 (800) 308-4358 between the hours of 7 a.m. and 7 p.m. CST Monday through Thursday or between 7 a.m. and 6 p.m. CST on Friday. Or, submit an online bond request, and one of our experts will contact you right away