Insurance Producer Bonds
What is an Insurance Producer Bond?
This specific type of surety bond ensures that insurance brokers fulfill their duties ethically and according to the laws of their city or state. In most cases, an insurance broker must file proof of a surety bond before he or she can obtain a business license.
Although most brokers work ethically and according to industry laws, purchasing insurance can still be risky for consumers who reveal personal information to their brokers. For this reason, most states require insurance brokers to be bonded before they can be licensed. In some states, such as New Mexico and New Jersey, insurance broker bonds are called “public adjuster and independent adjuster bonds.” But what are surety bonds, and why do you need one?
The exact obligations an insurance broker is expected to fulfill under a bond’s terms depends on the exact legal language found on the form, which varies by state. Generally speaking, most insurance broker bonds allow harmed parties to file a claim against the bond if an insurance broker commits any of the following wrongdoings:
- 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
If a claim is filed and proven to be valid, the consumer and/or government agency can be reimbursed for financial losses and other consequences. Some insurance broker bonds might also guarantee the larger insurance company that the broker represents will receive proper payment for its products.
Below is a link to the application to get started. Once completed, please email or fax it back to Bond Brokers: