What is an Injunction Bond?
The injunction bond is a type of court bond. It is typically required by a court when a plaintiff requests that the court place an injunction on the defendant.
Why is the injunction bond required?
Plaintiffs may request that a court place an injunction as a means of stopping a defendant from committing certain actions.
In return, the court may require them to post a bond. This bond, the injunction bond, provides financial guarantee to the defendant that if they are unjustly harmed as a result of the injunction, they will have a way of receiving compensation.
How do injunctions work?
If a plaintiff fears that a defendant may cause some form of irreparable damage, they may ask the court to intervene and issue a temporary restraining order (TRO) which is a form of an injunction.
To request an injunction, plaintiffs need to present solid proof that there is good cause to expect that a defendant may act in a damaging way.
Apart from the TRO, there is the preliminary injunction which may be issued at the beginning of a lawsuit and which lasts for the duration of the suit.
Finally, there are also permanent injunctions that limit a defendant's conduct permanently, beyond the lawsuit.
If this is your first time getting bonded, and you are not sure how bonds work, see our ‘What is a surety bond' guide for a full walkthrough!
In the sections below, you can learn more about the cost of the injunction bond, the claims process, and how to apply.
If a court has requested that you get this type of bond and you need more information about the bonding process, call us at 866.450.3412!
How Much Does the Injunction Bond Cost?
The cost of your bond is equal to a fraction of the total bond amount.
The amount of injunction bonds, i.e. the maximum possible amount of compensation the surety may extend, is determined by the court that orders the plaintiff to get bonded.
Typically, the amount is based on the possible damages a defendant may suffer due to the injunction, if it is ruled to have been unnecessary.
When the court orders you to obtain such a bond in a certain amount, the surety will provide you with a quote, based on several criteria.
Factors that determine your bond premium
Your personal credit score is the most important factor that influences the cost of your bond.
The higher an applicant's score, the cheaper it is for them to get bonded. This is because a good credit score signals to the surety that the likelihood of the bonded party defaulting on their bond agreement is low.
Along with credit score, the surety may also request to review applicants' personal and business financial statements, as well as information about any fixed or liquid assets they have.
Applicants who have a high credit score can expect to be offered a rate of 1%-2% of the total bond amount.
What Can Cause a Bond Claim?
If a court issues an injunction against a defendant, they are bound to comply with it. If it is later ruled that the injunction should not have been granted, and the defendant has suffered losses as a result, they may bring an action against the plaintiff's bond.
The action is brought against the plaintiff, and not the court that granted the injunction, since it was the plaintiff who requested the injunction in the first place.
When this happens, the surety must investigate the claim to determine whether indeed the defendant has suffered losses or damages due to the injunction. If that is the case, the surety may extend compensation to the claimant up to a maximum of the full bond amount.
Any compensation that is extended by the surety to claimants must ultimately be covered by the bonded party. This is a standard requirement of the bond agreement and is how the plaintiff can be held liable for requesting an injunction which may not have been necessary.
How Do I Get an Injunction Bond?
To apply for this type of bond, see our court bond application page. You will need to complete an application form, along with several other documents, all of which you will then need to submit to us.
Once we review your document, we will contact you to provide you with a free quote on your bond!
If you want to know more about this bond or how to obtain one, call our bond professionals at 866.450.3412!