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Insurance Broker Bond

An insurance broker bond is a type of surety bond required by state insurance departments to protect people from financial harm and potentially illegal acts on behalf of insurance brokers. 

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What is an Insurance Broker Bond?

Insurance brokers in most states across the country need to obtain an insurance broker bond. The bond is required to ensure the legal performance of insurance brokers and protect the general public from any fraudulent actions, and it is part of the standard licensing process to obtain this type of surety bond. With this type of surety bond, an insurance broker guarantees compliance with law and protection against frauds, manipulations, and other unethical actions. 

Like all other surety bonds, insurance broker bonds include three parties in the agreement. The insurance broker is the principal, and the state-specific government is the obligee requiring the bond and the surety is the bonding company that issues the bond to the principal. 

According to the agreement, a party can file a claim on the bond in the case that a broker manipulates insurance prices, sells improper insurance, or conducts any other fraud and unethical action. When a claim is made on the bond, the surety takes over the responsibility to pay for financial harm done to the customer. The principal is then responsible for repaying the surety agency in full for the claim. 

Bonding Solutions | Insurance Broker Bond
Bonding Solutions | Insurance Broker Bond
Bonding Solutions | Insurance Broker Bond

How much does an Insurance Broker Bond cost?

The insurance broker bond price depends on several factors, with the main one being the bond amount required from the state authority. Each state has a specific amount that is required for the bond. Most of the time, the insurance broker bond costs between $10,000 to $20,000. 

The bond premium is the actual amount that the principal will pay the surety company for obtaining the bond. The bond premium usually comes between 1-5% of the total bond price. In general, the insurance broker bond premium depends on the credit score and financial statement of each client. 

At Bonding Solutions, you can expect to pay less for the premium and get top-notch services. With over 60 years of combined experience, we offer the necessary expertise and tools to provide custom-tailored bonds and satisfy all the unique needs of our customers. If you need a consultation about your bond, contact us here, or make a quote and find out your bond price directly!

Why is an Insurance Broker Bond required?

An insurance broker bond is required as a guarantee that insurance brokers will honor the laws in each particular state. It’s part of the work license demanded by state authorities to protect the public from fraud and unethical actions. Although the surety pays for financial harm done to the customer, the insurance broker still needs to pay back the amount afterward. When the claim is made, the insurance broker faces both financial and reputational harm because the broken agreement means non-compliance with laws and work ethic.

How do I get started?

Getting started is EASY! Bonding Solutions is a leading national surety agency with the ability to underwrite insurance broker bonds in any state. Contact our team directly here or click the button below to start your easy online application and a team member will reach out to you shortly thereafter. We are dedicated to making the process easy and efficient to ensure that your business never suffers.

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