Insurance Broker Bond: What should you know?
Many states require insurance brokers to obtain a surety bond to protect customers from insurance brokers who may use their personal information in an unethical manner. An insurance broker should be someone that an individual can trust with their private information. Having this bond goes one more step towards boosting a customer’s confidence in working with your agency.
How does the insurance broker bond work?
In every surety bond, there are three parties: the principal, the obligee, and the surety. The principal is the individual that is required to purchase the surety bond. The obligee is the agency that requires a surety bond to be obtained. The surety is the underwriter of the surety bond, guaranteeing that the principal will meet the terms of the bond.
A customer may be able to file a claim against the bond if they feel that the insurance broker has done something wrong. This could include inflating quotes, convincing customers to purchase products they do not need, and asking customers to misrepresent themselves or their finances on insurance forms.
The surety company will investigate the claim, and if it is deemed valid, payment will be made to the complainant against the bond. The insurance broker will be responsible for repaying the amount paid out of the bond.
What will I pay for an insurance broker bond?
If your state requires you to purchase an insurance broker bond, how much you pay for your premium will depend on the amount of the bond you need. In most cases, you will be expected to pay just 1% of the bond amount. For example, if you need a bond of $20,000 then you will need to pay just $200 for coverage.
How do I get a bond?
You can fill out our simple online application and receive a fast, free quote for your insurance broker bond. Still, have questions? Call and speak to one of our licensed surety bond agents today. We can answer any questions you have about surety bonds and guide you through all of the steps to getting your bond as soon as possible.