Hawaii Collection Agency Bond: A Comprehensive Guide

April 26, 2021

Hawaii Collection Agency Bond

This guide provides information for insurance agents to help collection agencies obtain Hawaii Collection Agency Bonds

At a Glance:

  • Average Cost: Based on applicant’s credit
    • $25,000 bond: Between $188 to $1,250 per year
    • $15,000 bond: Between $125 to $750 per year
  • Bond Amount:
    • $25,000 for the main office location
    • $15,000 for each branch location
  • Who Needs it: All collection agencies seeking to obtain a license in Hawaii
  • 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 Hawaii: The Hawaii Professional and Vocational Licensing Division

Background

Hawaii Statute 443B-3 requires all collection agencies operating in the state to obtain a license with the Professional and Vocational Licensing Division. The Hawaii 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, collection agencies must purchase and maintain a surety bond to be eligible for licensure.

What is the Purpose of the Hawaii Collection Agency Bond?

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

Hawaii Collection Agency Bond Form

Hawaii Collection Agency Bond Form

How Can an Insurance Agent Obtain a Hawaii Collection Agency Surety Bond?

BondExchange makes obtaining a Hawaii 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? Enroll 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.

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

Surety companies will run a credit check on the owners of the collection agency to determine eligibility and pricing for the Hawaii Collection Agency bond. Owner’s with excellent credit and work experience can expect to receive the best rates. Owners 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 owner’s credit.

How Much Does the Hawaii Collection Agency Bond Cost?

The Hawaii Collection Agency surety bond can cost anywhere between $125 to $1,250 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 a $15,000 bond requirement.

$25,000 Collection Agency Bond Cost

Credit Score Bond Cost (1 year)
700+ $188
650 – 699 $250
625 – 649 $313
600 – 624 $375
550 – 599 $1,000
500 – 549 $1,250

$15,000 Collection Agency Bond Cost

Credit Score Bond Cost (1 year)
700+ $125
650 – 699 $150
625 – 649 $188
600 – 624 $225
550 – 599 $600
500 – 549 $750

*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 Hawaii Define “Collection Agency?”

To paraphrase Hawaii Statute 443B-1, a collection agency is any business entity who collects claims or money for a fee.

How do Collection Agencies Apply for a License in Hawaii?

Collection agencies in Hawaii must navigate several steps to secure their license. Below are the general guidelines, but applicants should refer to the application form for details on the process.

License Period – All Hawaii Collection Agency Licenses expire on June 30 of every even numbered year (2022, 2024 etc) and must be renewed before the expiration date

Step 1 – Purchase a Surety Bond

Collection agencies must purchase and maintain a $25,000 surety bond, plus an additional $15,000 surety bond for each branch location

Step 2 – Establish a Business Location

License applicants must have an office location located within the State of Hawaii and that is open during reasonable business hours

Step 3 – Appoint a Principal Collector

Collection agencies are required to appoint a principal collector who is responsible for managing the day to day operations of the business

Step 4 – Obtain a Certificate of Good Standing

License applicants must obtain a Certificate of Good Standing from the Hawaii Business Registration Division

Step 5 – Complete the Application

All Hawaii regulatory collection agency license applications should be mailed to the following address:

Collection Agencies
DCCA, PVL, Licensing Branch
P. O. Box 3469
Honolulu, HI 96801

Collection agencies must complete the application in its entirety, and pay the following fees:

    • $309 if registering between July 1, even-numbered year to June 30, odd-numbered year
    • $167 if registering between July 1, odd-numbered year to June 30, even-numbered year, pay
    • $25 fee per branch location

How Do Hawaii Collection Agencies Renew Their License?

Hawaii collection agencies should mail their completed renewal application, including a Certificate of Good Standing, to the following address:

Collection Agencies
DCCA, PVL, Licensing Branch
P. O. Box 3469
Honolulu, HI 96801

All Hawaii Collection Agency Licenses expire on June 30 of every even numbered year (2022, 2024 etc) and must be renewed before the expiration date.

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

The State of Hawaii does not require collection agencies to obtain any form of liability insurance as a prerequisite to obtaining a business license. Collection agencies must purchase and maintain a $25,000 surety bond, plus an additional $15,000 surety bond for each branch location.

How Do Hawaii Collection Agencies File Their Bond?

Collection agencies should mail the completed bond form, including the power of attorney, to the following address:

Collection Agencies
DCCA, PVL, Licensing Branch
P. O. Box 3469
Honolulu, HI 96801

The collection agency surety bond requires signatures from both the surety company that issues the bond and a representative from the collection agency. 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
  • Date the bond is signed

What Can Collection Agencies in Hawaii Do to Avoid Claims Against Their Bond?

To avoid claims on the Hawaii Collection Agency Bond, collection agencies must follow all license regulations in the state, pay all net proceeds on collections made in a month within 30 days of the month’s end.

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

Hawaii does not require collection agencies to purchase any form of liability insurance as a prerequisite to obtaining a license. 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 Hawaii Collection Agency Customers?

Hawaii 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.

2021-12-28T15:20:55-05:00