Bonds By Category

What is a Beauty Pageant Bond?

Beauty pageant bonds are a subset of the broader financial guarantee bond category that must be filed with the state government agency responsible for regulating beauty pageant activity in the pageant operator’s jurisdiction.

Beauty pageant bonds must be issued by insurance carriers admitted in the state where the government agency requiring the bond resides. The insurance carrier issuing any surety bond, such as a beauty pageant bond, will also be referred to as the “surety company” or the “bond company”. Beauty pageant bonds refer to the pageant operator as the Principal, the surety bond company as the Obligor and the state government agency as the Obligee.

Why is a Beauty Pageant Bond Required?

Beauty pageant operators are required to purchase financial guarantee bonds by state statutes to protect a government agency by transferring to a surety bond company the cost of ensuring the state is compensated for damages resulting from a pageant operator failing to refund prepaid sales and contestant fees in the event of a cancellation or failure to perform. The surety company provides the government a guarantee (the surety bond) that the public will receive payment for financial damages due to a violation of the statutes and regulations referenced in the bond form up to a limit specified in the bond (“penal sum” or “bond amount”). Ultimately, pageant operators are responsible for their actions and required by law to reimburse the surety company for any payments made under the bond or face civil action.

Beauty pageant bond violations triggering a bond payout may include a pageant operator failing to refund entry fees to contestants after a cancellation.

How much does a Beauty Pageant bond cost?

Beauty pageant bonds generally cost between 1.5% and 10% of the bond limit.

Example: $10,000 Beauty Pageant Bond Cost

Credit Score Premium Rate Bond Cost
680 or above 1.5% $150
650-675 3.0% $300
625-649 3.75% $375
600-624 5.0% $500
550-599 6.0% $600
500-549 7.5% $750
499 or below 10.0% $1,000

The actual cost of a specific beauty pageant bond can vary widely depending on the risk associated with legal precedent in the jurisdiction, the language in the bond form and the pageant operator’s license history, experience and creditworthiness.

Is a Credit Check Required for Beauty Pageant Bonds?

Credit checks are required for beauty pageant bonds and, ultimately, the surety insurance company determines how it will underwrite and price a surety bond.

How does the wording in the bond form impact the cost of a Beauty Pageant bond?

The bond form is a tri-party agreement which defines the rights and obligations of the government agency (obligee), surety company (obligor) and beauty pageant operator (principal). While many bond forms use similar language, each bond form can be customized by the government agency requiring the specific bond and may contain provisions that increase potential costs for the surety company, which will ultimately be passed on to the pageant operator via higher bond premiums, stricter underwriting or collateral. The primary text to consider in a beauty pageant bond surrounds (1) aggregate limits, (2) cancellation provisions and (3) forfeiture clauses.

Aggregate Limits
Bond forms always specify the penal sum defined as the maximum amount of financial damages any single party can recover from the bond related to a single claim occurrence. Most bond forms also contain a clause which limits the amount of financial damages from all parties and all claims to a specific amount (“aggregate limit”), usually the same amount as the penal sum. For example, a $15,000 beauty pageant bond with an aggregate limit of $15,000 will pay out no more than $15,000, regardless of the number of damaged parties or claim occurrences. Beauty pageant bonds without an aggregate limit will be more expensive than a bond with similar coverage containing an aggregate limit.

Cancellation Provisions
Most bonds contain a provision allowing for the surety company to cancel the bond (“Cancellation Provision”) by providing a notice to the pageant operator and government agency requiring the bond with the cancellation taking effect within a set period of time, usually 30 days (“Cancellation Period”). Cancellation provisions allow the surety company to cancel the bond for any reason, but most often due to the operator failing to pay premiums due, claim payouts, or material changes in the operator’s credit score. Beauty pageant bonds with no cancellation provision or cancellation periods greater than 30 days will be more expensive than a bond with similar coverage containing a standard cancellation provision.

Forfeiture Clause
Surety bond claims are paid by surety companies to damaged parties to reimburse that party for the financial loss incurred up to the bond penalty amount. Certain bonds contain a clause which requires the surety company to pay the full bond penalty to the damaged party, regardless of the actual damages incurred (“Forfeiture Clause”). Beauty pageant bonds with forfeiture clauses will be more expensive than a bond with similar coverage that does not contain the clause.