Claims Adjuster Surety Bonds
Claims adjuster bonds cover public adjusters, field and staff adjusters, and independent adjusters. Public adjusters, sometimes called loss assessors or just claims adjusters, are recognized in 44 states. They are the most widely recognized type of claims adjuster. Those states that do license and recognize public adjusters will require them to purchase, or, “post”, a claims adjuster bond as a prerequisite to obtaining their license. This means that, prior to obtaining a claims adjuster license as a public adjuster, you will need to purchase and sign a legally binding agreement promising to abide by certain stipulations. NFP Surety bonds in all 44 states that license public adjusters. We also bond independent claims adjusters, staff claims adjusters, and field adjusters, all under a claims adjuster bond.
Bonds guarantee professionalism and protect the public interest. The state agency requiring your bond can file a claim against it in case you or one of your employees has been suspected of operating outside the boundaries of ethical and lawful business practices. Read on for answers to the most commonly asked questions about claims adjuster bonds.
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Public Adjuster Bond
What exactly are they? Like other bonds, an adjuster bond is a legally binding agreement among three parties. In this case, you, the agency that is to grant you a claims adjuster 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”, “obligee”, and “guarantor”. These terms represent the three parties involved in the agreement.
A principal is the purchaser of the bond, which is 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 need a public 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 who are 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, 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 a 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 NFP Surety 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 claims 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 prior to granting or renewing licensing. 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 each individually, or you can contact NFP Surety to ask about blanket bonding for the entire company.
How they work?
Public adjuster bonds protect consumers by assuring the state agency licensing you 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 altogether with repeated claims.
It is in your best interest to resolve 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. So, 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 are these bonds?
Public adjuster bond price will vary according to state, because different states require different bond amounts. Your credit profile and company strength will also affect insurance broker bond cost. What you pay for the bond is called a premium.
Premiums for insurance broker bonds typically range from 1% – 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.
Claims Adjuster License
Can I get 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 who have civil judgements 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 on a bonding decision. You may pay a higher premium than others with a better credit history, but this will allow you to continue doing business.
In most cases, you can get your public adjuster bond the same day you apply. Visit NFP Surety online for to find out more about claims adjuster license information, and the public adjuster bond.
If you need more information about these or any other bonds, please don’t hesitate to contact us at 1-800-863-3210. We are always happy to answer any of your bonding questions. NFP Surety can also be contact via email at firstname.lastname@example.org or through the NFP Surety website.