Insurance Broker Bond

What Is an Insurance Broker Bond?

Insurance Broker Bond is a license & permit surety bond (a type of financial guarantee) required for insurance brokers in certain states before they can get their licenses.

In essence, it is a three-party contract between the insurance broker, the consumer, and the surety company. It is purchased by the insurance broker to comply with the state licensing requirements, in order to protect the consumer interests against unethical business practices of the insurance broker.

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Why Do You Need an Insurance Broker Bond?

Insurance Broker Bond provides guarantee that the brokers will comply with state insurance laws. It provides protection to parties that could be harmed as a result of a negligent act committed by a licensed insurance agent/agency. If an insurance broker violates some insurance laws & creates financial harms to his or her client or the general public, the insurance broker bond will pay for the damage to the parties harmed to the amount of bond coverage, i.e., ($25,000 insurance broker bond would provide $25,000 coverage)

Examples of violation of insurance laws include manipulate prices, intentionally sold unnecessary products, commit to fraud, etc.

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Which State Requires Insurance Broker Bond?

Insurance Broker Bond is not required in every state. Although regulations change over time, the following are examples of states that require insurance broker bonds.

California
Texas
New York
Illinois
Pennsylvania
New Jersey
North Carolina
Washington
Georgia
Idaho
New Mexico
Oklahoma
South Carolina
Kentucky
Maryland
Delaware

How Much Does an Insurance Broker Bond Cost?

The cost of an insurance broker bond depends on two factors: bond amount and your credit score

Bond Amount: The bond amount varies greatly, depending on the state. In 2022, Texas requires a minimum bond amount of $250,000, California requires a minimum bond amount of $10,000, and Illinois requires anywhere between $5,000 and $75,000.
Your credit score: your credit score affects the premium % of bond amount. This premium % revolves around 1% for most states. For example, a Texas Insurance Broker bond costs around $250 (1% of the bond amount of $250,000). However, for some states, the bond premium % may vary based on the credit score of the applicant

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Who Needs an Insurance Broker Bond

Insurance producers in many states are required to file proof of insurance broker surety bond before they can obtain their license.

Sometimes, more than one bond is required if the insurance broker operates across multiple lines of insurance (i.e, P&C, Surplus Lines, Life & Health). You should only buy the bond if you are told by relevant authority that you need one. There should be a letter or an email clearly stating that you need the bond and the amount of the bond

How do I get an Insurance Broker Bond?

You can get started now by filling out a 3-minute form and you can receive your bond within a day. Alternatively, you can call us at 1-(512) 856-7739 and get started with your bonding process

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Can I Get a Insurance Broker Bond with a Bad Credit?

Yes. Given that Insurance Broker Bond has a history of lower claims, most bonds don't require a credit check. Only bonds with higher claim history and higher bond amount (most of the time above $75,000) require a credit check.