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.