Arizona Collection Agency Bond

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Arizona Collection Agency Bond: A Comprehensive Guide

This guide provides information for insurance agents to help Collection Agencies obtain Arizona Collection Agency Bonds

At a Glance:

  • Lowest Cost: 0.5% of the bond amount per year based on the collector’s credit
  • Bond Amount: Based on the gross annual income the collection agency generated in the previous calendar year:

Table 1.1

Gross Income Bond Amount
Not over $250,000 $10,000
$250,001 to $500,000 $15,000
$500,001 to $750,000 $25,000
$750,001 and over $35,000

  • Who Needs It: All individuals and business entities seeking to obtain a collection agency license in the State of Arizona
  • Purpose: To ensure the public will receive compensation for any damages should the collection agency fail to comply with licensing law
  • Who Regulates Collection Agencies in Arizona: The Arizona Department of Insurance and Financial Institutions
Arizona Collection Agency Bond Form
Arizona Collection Agency Bond Form


Arizona Statute 32-1021 requires collection agencies operating in the state to obtain a license with the Department of Insurance and Financial Institutions. The Arizona legislature enacted the licensing laws and regulations to ensure that collection agencies engage in ethical business practices. In order to provide financial security for the enforcement of the licensing law, collectors must purchase and maintain a collection agency surety bond (limits outlined in Table 1.1) to be eligible for licensure.

What is the Purpose of the Arizona Collection Agency Bond?

Arizona requires collectors to purchase the Collection Agency Bond as part of the application process to obtain a collection agency license. The bond ensures that the public will receive compensation for financial harm if the collector fails to comply with the licensing regulations. In short, the bond is a type of insurance that protects the public if the collector breaks licensing laws.

How Can an Insurance Agent Obtain an Arizona Collection Agency Surety Bond?

BondExchange makes obtaining an Arizona Collection Agency Bond easy. Simply login to your account and use our keyword search to find the “collection” bond in our database. Don’t have a login? Gain access now and let us help you satisfy your customers’ needs. Our friendly underwriting staff is available by phone (800) 438-1162, email or chat from 7:30 AM to 7:00 PM EST to assist you.

At BondExchange, our 40 years of experience, leading technology, and access to markets ensures that we have the knowledge and resources to provide your clients with fast and friendly service whether obtaining quotes or issuing bonds.

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Is a Credit Check Required for the Arizona Collection Agency Bond?

Surety companies will run a credit check on the owners of the collection agency to determine eligibility and pricing for the Arizona Collection Agency bond. Collectors with excellent credit and work experience can expect to receive the best rates. Collectors with poor credit may be declined by some surety companies or pay higher rates. The credit check is a “soft hit”, meaning that the credit check will not affect the collector’s credit.

How Much Does the Arizona Collection Agency Bond Cost?

The Arizona Collection Agency surety bond can cost anywhere between 0.5% to 5% of the bond amount per year. Insurance companies determine the rate based on a number of factors including your customer’s credit score and experience. The chart below offers a quick reference for the approximate bond cost on the $25,000 bond requirement.

$25,000 Collection Agency Bond Cost

Table 1.2

Credit Score Bond Cost (1 year) Bond Cost (1 month)
700+ $125 $13
650 – 699 $250 $25
625 – 649 $312.50 $32
600 – 624 $470 $47
550 – 599 $1,000 $100
500 – 549 $1,250 $125

*The credit score ranges do not include other factors that may result in a change to the annual premium offered to your customers, including but not limited to, years of experience and underlying credit factors contained within the business owner’s credit report.

How Does Arizona Define “Collection Agency”?

To paraphrase Arizona Statute 32-1001, a collection agency is any business entity who collects or solicits the right to collect payment on behalf of another. Exemptions to this definition include:

  • Attorneys
  • Common carriers
  • Banks and other lending institutions
  • Title insurers
  • Licensed real estate brokers

Arizona Collection Agency Bond

BondExchange now offers monthly pay-as-you-go subscriptions for surety bonds. Your customers are able to purchase their bonds on a monthly basis and cancel them anytime. Learn more here.

How Do Collection Agencies Apply for a License in Arizona?

Collectors in Arizona must navigate several steps to secure their collection agency license. Below are the general guidelines, but collectors should refer to the licensing statutes (scroll to Chapter 9) for details on the process.

License Period – The Arizona Collection Agency License expires on January 1 of each year and must be renewed before the expiration date

Step 1 – Hire a Qualified Individual

Collectors must hire a qualifying individual who is an active manager capable of handling the day to day operations of the collection agency and meets the following criteria:

    • Is a citizen of the United States and is of good moral character
    • Not have been convicted of a crime involving moral turpitude
    • Not have defaulted on payment of money collected or received for another
    • Not have been a former licensee under the provisions of this chapter whose license was suspended or revoked and not subsequently reinstated

Step 2 – Purchase a Surety Bond

Collection agencies must purchase and maintain a collection agency surety bond (limits outlined in Table 1.1)

Step 3 – Request NMLS Account

The Arizona Collection Agency License application is submitted electronically through the Nationwide Multistate Licensing System (NMLS). To submit a license application, applicants must first request to obtain an NMLS account.

Step 4 – Complete the Application

All Arizona Collection Agency License applications must be completed online through the NMLS. Applicants must complete the entire application, and submit unaudited financial statements dated within at least 90 days of the end of the collector’s fiscal year.

Step 5 – Pay Fees

Applicants for the Arizona Collection Agency License must pay the following fees when submitting their license application:

    • $1,500 application fee
    • $36.25 background check fee
    • A licensing fee dependent on the month the license is issued:

Table 1.3

Month the License is Issued Licensing Fee
Feb/Mar/Apr $600
May/Jun/Jul $450
Aug/Sep/Oct $300
Nov/Dec/Jan $150

How Do Arizona Collection Agencies Renew Their License?

Collection agencies can renew their license online through the NMLS. License holders need to simply login to their account to access their renewal application. The Arizona Collection Agency License expires on January 1 of each year and must be renewed before the expiration date.

What Are the Insurance Requirements for the Arizona Collection Agency License?

The State of Arizona does not require collectors to obtain any form of liability insurance as a prerequisite to obtaining a Collection Agency License. Collectors must purchase and maintain a collection agency surety bond.

How Do Arizona Collection Agencies File Their Bond?

Collection agencies should submit the completed bond form, including the power of attorney, electronically through the NMLS. The collection agency surety bond requires signatures from both the surety company that issues the bond and the collector. The surety company should include the following information on the bond form:

  • Legal name of entity/individual(s) buying the bond
  • Surety company’s name
  • Bond amount
  • License Type (collection agency)
  • Date the bond goes into effect

What Can Businesses Do to Avoid Claims Against the Arizona Collection Agency Bond?

To avoid claims on the Collection Agency Bond, collection agencies must follow all license regulations in the state, including some of the most important issues below that tend to cause claims:

  • Ensure that money collected is paid to the proper parties
  • Do not engage in any acts of fraud

What Other Insurance Products Can Agents Offer Collection Agencies in Arizona?

Arizona does not require collection agencies to obtain any form of liability insurance. However, most reputable agencies will seek to obtain this insurance anyway. Bonds are our only business at BondExchange, so we do not issue liability insurance, but our agents often utilize brokers for this specific line of business. A list of brokers in this space can be found here.

How Can Insurance Agents Prospect for Arizona Collection Agency Customers?

Arizona conveniently provides a public database to search for active collection agencies in the state. The database can be accessed here. Contact BondExchange for additional marketing resources. Agents can also leverage our print-mail relationships for discounted mailing services.

Arizona Collection Agency Bond