The Expert Podcast

So what is a surety bond for a court appeal and how do they work? Well, you may have heard quite a bit in the news about a very high-profile case involving a surety bond for an appeal of a litigation court case.

The way an appeal bond works is this: if you lose a court case and a judgment is issued against you, and you want to appeal that judgment, say somebody sues you for $10,000 and you lose the lawsuit, you're supposed to pay that $10,000 judgment because interest accrues on it. If you want to appeal, that's fine, but you're supposed to pay the judgment while you wait for the appeal to happen.

A surety bond is a way for you to not have to pay the judgment initially. You put up a bond in the amount of the judgment while your appeal takes place. If you prevail on your appeal and win, then you don't have to pay the judgment. However, you do have to pay the surety bond fee.

The surety bond fee is set by the bonding company, and some courts require that the bond be a multiple of the judgment. So, if you have a judgment of $10,000, some courts might require you to buy a bond for $15,000. However, the actual cost of the bond is usually just several hundred dollars. It's a way for you to avoid paying that money out of pocket if you believe you're going to win your appeal.

Now, what happens if you lose your appeal? If you lose, the surety bond ensures that the plaintiff gets paid. The surety bond will pay the judgment, but you will have to pay the bonding company back. The surety company will make sure you have enough assets to pay for the bond and the judgment. So, it's not free money like an insurance policy where you buy insurance and if you lose, they pay the claim. They will pay initially if you don't, but they will come after you to recover the money.

A surety bond for an appeal is a good way to avoid having to come out of pocket for an appeal you believe you're going to win, but it does involve a fee. It's a method to ensure that the defendant is made whole while allowing the plaintiff to exercise their right to appeal without having to immediately pay the full amount.

If you have questions about any type of surety bond or an appeal bond, you can click the link below (riskcoverage.com). We also have consultations available where you can talk live one-on-one with a licensed surety bond producer. We're glad to be of assistance.