Insurance Adjuster Bond

An adjuster bond is a legally binding agreement among three parties. In this case, you, the agency that is to grant you a license as a public adjuster, and the company through which you are purchasing your bond (the surety) are the three parties. In this contract, you (or your company) may notice some new terms if you are new to bonding, including, “principal,” “obligor” and “guarantor.” These terms represent the three parties involved in the agreement.

A principal is the purchaser of the bond, you or your company. You are also the obligor – the one obliged to do something. You will be obliged (required) to follow specific ethical business practices worthy of a claims adjuster license, specific to being an adjuster. You will also agree to operate according to regulations governing public adjusters.

An obligee is the state agency involved – the party to which you are obliged. This is the party that can file a claim on your bond should a complaint be proven true and in violation of the bond agreement.

The guarantor is the surety. This is the company from which you are purchasing your bond. They guarantee payment to the obligee should a claim be placed on your bond and proven to be true.

Do I need a public adjuster bond?

Public adjusters are a type of claims adjuster, paid by a policyholder, who appraises and negotiates claims for the policyholder. In negotiating a claim, a licensed public adjuster is the only claims adjuster type that can speak on behalf of the insured involved in the claim.

If you engage in these activities, you are acting as an adjuster. Depending on the state in which you live and work, you may be required to get an insurance adjuster bond, or you may need to obtain a claims adjuster license of a different type.

Attorneys and insurance brokers are the only other two entities, besides an adjuster, that can speak for the insured during the claims process. Advocating for the insured as a professional public adjuster in states that do not license or regulate public adjusters is unrecognized and even prohibited by law, except in cases of emergency.

During times of disaster and catastrophe, out-of-state adjusters licensed in a state other than the one experiencing the emergency can register as an emergency adjuster. Most often, independent claims adjusters who represent insurance companies are the ones who can register. Occasionally, public adjusters can also register in emergencies.

The details of this policy will vary by state. Emergency policies can be found on a state’s website or by calling the state agency governing insurance professionals. You do not need another, a separate bond if you are an out of state adjuster registering to practice business in another state during state emergencies, provided you are practicing in the line of authority in which you are already bonded in your home state.

If you live in a state that recognizes and licenses public adjusters, you will need your public adjuster bond. Typically, you will need separate bonding for each line of authority. States with reciprocity agreements sometimes require you to become bonded in their state, even if you are bonded in your home state. Contact us for information on reciprocity rules between your home state and another, or contact your state’s department of insurance or equivalent agency.

If your state does not recognize or license public adjusters, you will likely need a bond do something similar, such as working as an independent adjuster for insurance companies. You can work as any other type of adjuster, as well, but most states do recognize and license public adjusters.

What states require public adjuster bonds?

All 44 states that license public adjusters require a public adjuster bond to be posted before granting or renewing licenses. Alabama, Alaska, South Dakota and Wisconsin are the only states that do not recognize public adjusters.

If you have more than one office within or across state lines, you will likely need the public adjuster bond for each office. If you have employees, you may need to bond them each individually, or you can contact us to ask about blanket bonding for the entire company.

How do they work?

Public adjuster bonds protect consumers by assuring the state agency licensing that you will abide by the bond conditions. These include state and local regulations as well as expected business practices. If you or one of your employees violates the terms of the bond agreement, a claim can be made on the bond. If the claim is proven to be valid, the guarantor (surety) will pay the penal amount due, up to the bond amount posted.

You will need to repay the surety though, as well as any associated fees incurred as a result of the claim paid on your bond. Besides being expensive in the present, a claim today can cost thousands in the future. Bond claims will cause underwriters to raise your bond price when you need to renew your license and buy another one. Your surety may even decide to drop you all together with repeated claims.

It is in your best interest to resolve an issue with customers as soon and as agreeably as possible. A claim on your bond could prevent you from continuing to work as an adjuster at license renewal time. You may no longer qualify for a bond, or your rate may become prohibitively expensive for you. Without bonding, you cannot get licensed as an adjuster. It’s always best to clear things up with customers before they can file a complaint against you that results in an agency filing a claim.

How much do adjuster bonds cost?

Public adjuster bond prices will vary according to the state because different states require different bond amounts. Your credit profile and company strength will also affect insurance broker bond costs. What you pay for the bond is called a premium.

Premiums for insurance broker bonds typically range from 1 percent to 7.5 percent of the bond amount. A bond amount of $5,000 does not necessarily mean that you will only pay $50 for your bond, though, even if you have a perfect credit score. Likewise, a bond amount of $50,000 will not necessarily cost you an entire 1 percent of that amount.

Can I get a public adjuster bond with bad credit?

Bad credit public adjuster bonds are available for those who are facing financial hardship, have filed for bankruptcy or have civil judgments against them. Underwriters will examine credit when you apply for a bond, but credit is not the only consideration.

We have special bond products for those who are credit-challenged, where you can become bonded with credit bearing less weight in a bonding decision. You may pay a higher premium than others with a better credit history, but you will be able to continue doing business.

In most cases, you can get your bond the same day you apply. Call us at 800.863.3210 to find out more about claims adjuster license information and the insurance adjuster bond.