What is a Texas For Profit Legal Service Contracts Bond
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There are various conditions for the proper execution of a For-Profit Legal Service Contract Company in Texas as mandated by the Occupations Code of Texas by the Insurance Code.
One of which is to ensure that the company’s obligations to its legal service contract holders, or those who purchased the services of the For-Profit Legal Service Contract Company, will be fulfilled.
A surety bond is needed to ensure that. The bond is a financial security necessary for the benefit of the legal service contract holders.
What are the requirements for the For-Profit Legal Service Contracts Bond?
- The conditions of the bond must follow the Texas Insurance Code
- The surety bond company must be licensed in Texas
- The bond amount should be made payable to the Executive Director in case a claim arise
- A 60-day cancellation notice is required for this bond
What is the bond amount?
The bond amount will depend on the annual gross revenue generated by the For-Profit Legal Service Contract Company.
|Annual Gross Revenue||Bond Amount|
|$300,000 or less||$50,000|
|More than $300,000 but less than $750,000||$75,000|
|$750,000 or more||$100,000|
The Executive Director will maintain the bond’s validity as long as the For-Profit Legal Service Contract Company is conducting business in the state of Texas.
Who should get this bond?
For-Profit Legal Service Contract Companies, as well as the administrators and sales representatives who are working in the said companies, will need this bond to be registered in Texas.
What are the requirements to be registered as a For-Profit Legal Service Contract Company in Texas other than a surety bond?
- Complete the Legal Service Contract Company Registration form (LSC001)
- Provide the name and the company’s Texas Department of Licensing and Regulation registration number
- A sample of the legal service contract of the company that will be sold to the holders
- An audited financial statement of the company, as well as an audit report
- An actuary’s certified statement that describes the For-Profit Legal Service Contract Company’s reserve
- Proof of the company’s financial capability
- Pay the registration fee. The registration fee will depend on the number of legal services contracts sold in the state within the last 12 months. The registration fees are as follows:
- For 0-1,000 contracts sold, the registration fee is $250
- For 1,001 to 2,500 contracts sold, the registration fee is $500
- For more than 2,500 contracts sold, the registration fee is $750
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