Maine Compliance: Understanding the Third-Party Liability Bond

If you operate a business in Maine that involves financial transactions, professional services, or public contracts, you may be required to obtain a Third-Party Liability Bond. This type of surety bond ensures that businesses and professionals fulfill their obligations and protect clients, customers, or government entities from financial loss due to fraud, negligence, or contractual breaches.

In my experience, businesses often first encounter Third-Party Liability Bond requirements when applying for a license, bidding on government contracts, or working in regulated industries such as healthcare, finance, or construction. Understanding how these bonds work, who needs them, and how to obtain one is key to ensuring compliance with Maine’s regulations.

What is a Third-Party Liability Bond?

A Third-Party Liability Bond is a type of surety bond that protects individuals or entities (third parties) from financial harm caused by the bonded business or professional. If the bonded party fails to meet its obligations, violates regulations, or causes financial loss, a claim can be filed against the bond to compensate the affected party.

Key Functions of a Third-Party Liability Bond

✔ Provides financial protection to customers, clients, or the government.
✔ Ensures regulatory compliance with Maine laws.
✔ Encourages ethical business practices and accountability.
✔ Covers damages or losses caused by misconduct, fraud, or negligence.

These bonds differ from general liability insurance because they do not cover the bonded party’s own losses. Instead, they protect third parties who suffer financial damage due to the bonded party’s actions.

Who Needs a Third-Party Liability Bond in Maine?

From my experience, a variety of businesses and professionals in Maine require Third-Party Liability Bonds, particularly those in regulated industries or those that handle public funds, contracts, or sensitive client information.

Industries and Professions That May Require a Third-Party Liability Bond

1. Healthcare Providers and Medical Professionals

• Home healthcare agencies

• Medical equipment suppliers

• Nursing homes and long-term care facilities

• Medical billing companies

• Pharmacies and prescription drug providers

In the healthcare sector, these bonds often ensure compliance with Medicaid and Medicare regulations, protecting the government and patients from fraudulent claims or billing errors.

2. Financial and Fiduciary Services

• Mortgage brokers and loan officers

• Tax preparers and accounting firms

• Credit repair companies

• Debt collection agencies

• Money transmitters and check cashing businesses

These businesses handle sensitive financial transactions, and a Third-Party Liability Bond guarantees ethical and lawful financial practices while protecting consumers and investors.

3. Contractors and Construction Businesses

• General contractors working on government-funded projects

• Subcontractors handling municipal or state construction work

• Public works and infrastructure companies

Maine municipalities often require these bonds to protect against contract breaches, faulty workmanship, or financial mismanagement on public projects.

4. Transportation and Logistics Providers

• Freight brokers (BMC-84 bond required by FMCSA)

• Non-emergency medical transportation providers

• Taxi and rideshare operators requiring municipal permits

These bonds ensure that third parties—such as customers or regulatory agencies—are protected from financial losses due to service failures or regulatory violations.

5. Other Regulated Businesses

• Waste management and environmental services

• Technology companies handling sensitive data

• Security service providers (private investigators, alarm companies, etc.)

In our experience, we’ve found that businesses in regulated industries often need these bonds as part of their licensing or contract approval process.

How Does a Third-Party Liability Bond Work?

A Third-Party Liability Bond functions like other surety bonds, involving three main parties:

1. The Obligee – The government agency, customer, or client requiring the bond.

2. The Principal – The business or professional obtaining the bond.

3. The Surety – The company that issues the bond and guarantees payment in case of a claim.

Claims Process

If the bonded business or individual fails to meet their obligations, a third party (customer, government agency, or client) can file a claim against the bond.

✔ The surety company investigates the claim.
✔ If the claim is valid, the surety may compensate the affected third party.
✔ The bonded party must then reimburse the surety for the paid claim.

Because the bonded party remains responsible for repaying any claims, these bonds do not act as insurance but rather as a financial guarantee of responsibility.

Maine’s Third-Party Liability Bond Requirements

The specific requirements for Third-Party Liability Bonds in Maine vary by industry and the entity requiring the bond.

Common State and Local Bond Requirements

• Maine Department of Health and Human Services (DHHS): Requires Medicaid providers to secure bonds for compliance.

• Maine Bureau of Motor Vehicles (BMV): May require auto-related businesses to hold a third-party liability bond.

• Maine Public Utilities Commission (PUC): Requires bonds for businesses providing energy or telecommunications services.

• Municipal Governments: Many cities and towns in Maine require specific contractor, taxi, and waste disposal bonds.

We’ve often helped businesses determine the exact bond requirements by working directly with state and local agencies. If you're unsure of what you need, we can guide you through the process.

How Much Does a Third-Party Liability Bond Cost?

The cost of a Third-Party Liability Bond in Maine depends on several factors:

1. Bond Amount

• Some bonds have fixed amounts set by law or contract.

• Others are determined based on revenue, contract size, or risk exposure.

2. Credit Score and Financial History

• Higher credit scores typically result in lower premiums (often 1-5% of the bond amount).

• Lower credit scores may lead to higher rates (5-15%), but we offer options for applicants with challenged credit.

3. Industry and Risk Level

• Bonds for high-risk industries, such as financial services and construction, may have higher rates.

Typical Price Range for Third-Party Liability Bonds in Maine

Bond Amount

Estimated Annual Premium (Good Credit)

Estimated Annual Premium (Low Credit)

$10,000

$100 - $500

$500 - $1,500

$50,000

$500 - $2,500

$2,500 - $7,500

$100,000

$1,000 - $5,000

$5,000 - $15,000

How to Obtain a Third-Party Liability Bond in Maine

We’ve found that getting a Third-Party Liability Bond is a quick and straightforward process when working with an experienced surety provider.

Steps to Obtain a Bond:

1. Determine the Bond Requirement – Check with state agencies, local municipalities, or licensing boards.

2. Complete a Bond Application – Provide business details and financial information.

3. Underwriting and Approval – The surety company reviews financial risk and determines the bond cost.

4. Pay the Bond Premium – Once approved, pay the premium to activate the bond.

5. File the Bond – Submit the bond to the appropriate agency to finalize compliance.

How We Can Help

We’ve helped countless Maine businesses secure Third-Party Liability Bonds quickly and at competitive rates. Whether you’re a contractor, medical provider, financial professional, or transportation company, we simplify the bond process so you can focus on running your business.

✅ Fast Approvals – Many bonds issued within 24 hours.
✅ Competitive Rates – We shop for the best rates from top surety providers.
✅ Expert Support – We help you understand and meet all compliance requirements.

Get Your Third-Party Liability Bond in Maine Today!

Need a Third-Party Liability Bond to stay compliant with Maine regulations? We make it easy. Contact us today to get started!