Insurance Brokers Bond

An insurance broker bond guarantees that the insurance broker accounts for insurance premiums to their companies, and the public. The insurance broker bond protects individuals who may be harmed by the actions of a licensed insurance broker, and is required by the state department of insurance.

The insurance broker bond industry is a huge one since most individuals and businesses require at least one insurance policy at some point. The insurance broker bond often provide the best prices and insurance options since they sell several different types and brands.

Protection

State and local governments require insurance brokers to have insurance broker bonds to ensure that their practices are ethical and operate according to the law. These specialized insurance broker bonds protect both consumers and the general public against fraud and unethical behavior on the part of the broker. The bond protects against predatory practices such as:

using inflated or false quotes to increase profit

coercing consumers to purchase inappropriate insurance products

encouraging customers to misrepresent themselves on insurance applications

encouraging customers to misrepresent their financial situation on insurance applications

The insurance broker bond also protects companies that provide brokers with insurance products. Since the insurance broker bond acts as an intermediary between the insurance company and the consumer, the company needs to know it receives payment for its products. Insurance brokers often sell many different "brands" of insurance, and the bond reassures each insurance supplier that insurance broker bond will receive the money collected by the broker.

Getting the insurance broker bond

Lakhani insurance specialize in selling all types of surety bonds, including mortgage broker and auto dealer bonds, also issue insurance bonds. Bond prices are typically based on an application process, your credit score, a thorough financial check, and your financial strength. The insurance broker bonds must be able to cover the face value of the bond since the broker could potentially have to pay the whole amount if a valid claim is ever filed against the bond. Bond values are usually based on the volume of business the broker performs or expects to perform. Insurance broker bonds who have poor or little credit can still obtain a bond but will most likely have to go through a company that specializes in subpar credit bonds. Since the underwriting is more complex and the bond represents a greater risk for the surety company, sub par bonds have higher rates.