Public Adjuster Bonds

At Surety Bonds Agent, we offer a full range of surety bonds nationwide through an extended carrier network. Continue below to learn more about public adjuster bonds. If you have additional questions or want to explore bonding solutions for your business, speak with one of our knowledgeable surety bond experts.

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What Are Public Adjuster Bonds?

The majority of states require licensing and bonding of public adjusters because of the fiduciary nature of their relationship with clients.  Public adjuster bonds are a type of license and permit bond that guarantee compliance with state laws and regulations. They protect the state and the public against financial loss stemming from the unlawful, unethical, or negligent actions of a licensed public adjuster. Specifically, they ensure that anyone incurring such damages has legal recourse and that funds will be available for compensating them for their loss.

Who Needs Them?

If you plan to work as a public adjuster in a state that requires public adjusters to be licensed, you’ll need to purchase a public adjuster surety bond in the amount required by the particular state. Depending on the state, that could be as little as $1,000 or as much as $50,000. This amount is known as the bond’s “penal sum” and is the maximum amount that will be paid out on a single claim.

The bond must be renewed at the end of its term, which typically is either one year or two. If your bond is cancelled or lapses, your public adjuster license could be suspended or revoked.

At Surety Bonds Agent, we offer a full range of surety bonds nationwide through an extended carrier network. Continue below to learn more about public adjuster bonds. If you have additional questions or want to explore bonding solutions for your business, speak with one of our knowledgeable surety bond experts.

CONTACT US FOR A

FREE PUBLIC ADJUSTER BOND QUOTE

What Are Public Adjuster Bonds?

The majority of states require licensing and bonding of public adjusters because of the fiduciary nature of their relationship with clients.  Public adjuster bonds are a type of license and permit bond that guarantee compliance with state laws and regulations. They protect the state and the public against financial loss stemming from the unlawful, unethical, or negligent actions of a licensed public adjuster. Specifically, they ensure that anyone incurring such damages has legal recourse and that funds will be available for compensating them for their loss.

If you plan to work as a public adjuster in a state that requires public adjusters to be licensed, you’ll need to purchase a public adjuster surety bond in the amount required by the particular state. Depending on the state, that could be as little as $1,000 or as much as $50,000. This amount is known as the bond’s “penal sum” and is the maximum amount that will be paid out on a single claim.

The bond must be renewed at the end of its term, which typically is either one year or two. If your bond is cancelled or lapses, your public adjuster license could be suspended or revoked.

The surety bond agreement is a legally binding contract among three parties referred to as the “obligee,” the “principal,” and the “surety.”

  • The obligee is the state licensing authority that requires the purchase of a public adjuster bond.
  • The principal is the public adjuster required to purchase the bond. 
  • The surety is the company that authorizes the bond and guarantees payment of claims.

The principal’s violation of fiduciary responsibilities—misrepresenting an insurance carrier’s settlement offer to a client, for example—gives the injured party the right to file a claim against the public adjuster’s bond for any resulting loss. While the surety guarantees payment of valid claims, it’s the principal who is legally obligated to pay them.

What typically happens is that the surety validates a claim first and then pays it initially on behalf of the principal. In doing so, the surety is extending credit to the principal, creating a debt that the principal must subsequently repay. If it is not repaid within a certain period of time, the surety can take legal action against the principal.

The annual premium for a public adjuster bond is calculated by multiplying the bond’s penal sum by the premium rate assigned by the surety. The premium rate reflects the underwriters’ assessment of the principal’s creditworthiness, which is based largely on the principal’s personal credit score. A high credit score indicates that the risk of the principal not repaying the surety for claims paid on the principal’s behalf is low.  Consequently, the premium rate will be low, potentially as low as one percent.  A principal with lesser credit will pay a higher premium rate.

How Do They Work?

The surety bond agreement is a legally binding contract among three parties referred to as the “obligee,” the “principal,” and the “surety.”

  • The obligee is the state licensing authority that requires the purchase of a public adjuster bond.
  • The principal is the public adjuster required to purchase the bond.
  • The surety is the company that authorizes the bond and guarantees payment of claims.

The principal’s violation of fiduciary responsibilities—misrepresenting an insurance carrier’s settlement offer to a client, for example—gives the injured party the right to file a claim against the public adjuster’s bond for any resulting loss. While the surety guarantees payment of valid claims, it’s the principal who is legally obligated to pay them.

What typically happens is that the surety validates a claim first and then pays it initially on behalf of the principal. In doing so, the surety is extending credit to the principal, creating a debt that the principal must subsequently repay. If it is not repaid within a certain period of time, the surety can take legal action against the principal.

What Do They Cost?

The annual premium for a public adjuster bond is calculated by multiplying the bond’s penal sum by the premium rate assigned by the surety. The premium rate reflects the underwriters’ assessment of the principal’s creditworthiness, which is based largely on the principal’s personal credit score. A high credit score indicates that the risk of the principal not repaying the surety for claims paid on the principal’s behalf is low.  Consequently, the premium rate will be low, potentially as low as one percent.  A principal with lesser credit will pay a higher premium rate.

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