Insurance Adjuster Bond

An insurance 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 whom 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.

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.

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 to 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.

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 a public adjuster bond for each office. If you have employees, you may need to bond them individually, or you can contact us to ask about blanket bonding for the entire company.

Insurance adjuster bonds protect consumers by ensuring that 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.

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.

Insurance 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 to 7.5% 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% of that amount.