Idaho Escrow Agency Bond: A Comprehensive Guide
This guide provides information for insurance agents to help their customers obtain an Idaho Escrow Agency bond.
*This page focuses exclusively on the surety bond required for escrow agencies operating in Idaho. Escrow agencies that are licensed as business entities must also obtain a $200,000 Fidelity bond or similar insurance coverage. Contact BondExchange to obtain a Fidelity bond.
At a Glance:
- Lowest Cost: $150 per year or $15 a month
- Bond Amount: Determined on a case-by-case basis (more on this later)
- Who Needs It: All escrow agencies operating in Idaho
- Purpose: To protect the public from financial harm if the escrow agency commits fraud or engages in unfair business practices
- Who Regulates Escrow Agencies in Idaho: The Idaho Department of Finance
Background
Idaho Statute 30-903 requires all escrow agencies operating in the state to obtain a license from the Department of Finance. The Idaho Legislature enacted the licensing requirement to ensure that escrow agencies do not engage in unethical business practices. To provide financial security for the enforcement of the licensing law, escrow agencies must purchase and maintain a surety bond to be eligible for licensure.
What Is the Purpose of an Idaho Escrow Agency Bond?
Idaho requires all escrow agencies to purchase a surety bond as part of the application process to obtain a license. The bond ensures that restitution is available to any damaged party should the escrow agency fail to abide by the regulations outlined in the Idaho Statutes Title 30, Chapter 9. Specifically, the bond protects claimants if the escrow agency commits fraud or engages in unfair business practices. In short, the bond is a type of insurance that protects the public if the escrow agency violates the terms of its license.
How Can an Insurance Agent Obtain an Idaho Escrow Agency Bond?
BondExchange makes obtaining an Idaho Escrow Agency bond easy. Simply log in to your account and use our keyword search to find the “escrow agency” 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.
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How Is the Bond Amount Determined?
Idaho Statute 30-909 states that the Escrow Agency bond limit is determined by the average month-end balance of the escrow trust accounts of the applicant or licensee for the preceding calendar year, in increments as described below:
- Average month-end escrow trust account balances of $50,000 or less, a bond limit of $20,000 required
- Average month-end escrow trust account balances of $50,001 to $250,000, a bond limit of $50,000 is required
- Average month-end escrow trust account balances of $250,001 to $500,000, a bond limit of $100,000 is required
- Average month-end escrow trust account balances of $500,001 to $750,000, a bond limit of $150,000 is required
- Average month-end escrow trust account balances of $750,001 to $1,000,000, a bond limit of $200,000 is required
- Average month-end escrow trust account balances of more than $1,000,000, a bond limit of $250,000 is required
Is a Credit Check Required for the Idaho Escrow Agency Bond?
Surety companies will run a credit check on the escrow agency to determine eligibility and pricing for the Idaho Escrow Agency bond. Escrow agencies with excellent credit and work experience can expect to receive the best rates. Escrow agencies with poor credit may be declined by some surety companies or have to pay higher rates. The credit check is a “soft hit”, meaning that the credit check will not affect the applicant’s credit.
How Much Does the Idaho Escrow Agency Bond Cost?
The Idaho Escrow Agency bond can cost between 0.5% to 5% of the bond amount per year. Monthly subscription options are also available. Insurance companies determine the rate based on several factors including your customer’s credit score and experience. The chart below briefly references the approximate bond cost on the $20,000 bond requirement.
$20,000 Idaho Escrow Agency Bond Cost
| Credit Score* | Bond Cost (1 Year) | Bond Cost (1 month) |
|---|---|---|
| 720+ | $150 | $15 |
| 625 – 719 | $200 | $20 |
| 600 – 624 | $500 | $50 |
| 575 – 599 | $600 | $60 |
| 550 – 574 | $1,000 | $100 |
| 500 – 549 | $1,400 | $140 |
*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 Idaho Define “Escrow Agency”?
To paraphrase Idaho Statute 30-902, an escrow agency is a third-party business that accepts or receives escrows for deposit. For example, an escrow agency may hold money, documents, or personal property until all stipulations of a contract have been met between the other parties.
Exemptions to this definition include the following:
- Any person licensed to practice law in Idaho
- Banks, savings and loan associations, credit unions, and industrial loan companies
- Licensed title insurance companies
- Real estate companies (includes brokers and salespersons)
- Certified public accountants
- State and federal chartered nondepository financial institutions
- Mortgage brokers and lenders
- Any receiver, trustee, executor, administrator, or guardian that is under the supervision of a state or federal court
- Mortgage companies
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 Escrow Agencies Become Licensed in Idaho?
Escrow agencies in Idaho must navigate several steps to obtain a license. Below are the general guidelines, but applicants should refer to the Department of Finance’s Escrow Forms webpage for details on the process.
License Period – The Idaho escrow agency license must be renewed before or on April 30th of each year with the Department of Finance.
Step 1 – Fulfill Financial Requirements
Escrow agencies are required to purchase and maintain a surety bond, a $200,000 Fidelity bond, and a $50,000 Errors and Omissions policy.
Step 2 – Complete the Application
The Idaho Escrow Agency License Application must be completed in its entirety and sent to the Department of Finance. Proof of all financial obligations must be included, as well as a $350 fee. In addition, the names, titles, complete addresses, and percentage of ownership of each director, manager, member, and supervising escrow agent are required to be listed with the application.
How Do Idaho Escrow Agencies Renew Their License?
The escrow agency license must be renewed on or before April 30th of each year with the Idaho Department of Finance. Further instructions on how to do so can be found in the Idaho Escrow Renewal Application.
What Are the Insurance Requirements for Escrow Agencies in Idaho?
According to Idaho Statute 30-909, the escrow agency must purchase and maintain a $50,000 Errors and Omission policy.
How Do Idaho Escrow Agencies File Their Bonds?
Escrow agencies should submit their completed bond forms, including the power of attorney when submitting their license applications to the Idaho Department of Finance (see the mailing address listed below).
Department of Finance
PO Box 83720
Boise, ID 83720
The surety bond requires signatures from the surety company, as well as a representative from the escrow agency. The surety company should include the following information on the bond form:
- The legal name of the individual buying the bond
- Surety company’s name
- Date the bond is signed
What Can Idaho Escrow Agencies Do to Avoid a Claim Against Their Surety Bond?
The best way to avoid a bond claim as an escrow agency in Idaho is to simply comply with state license laws. This includes accepting and receiving escrows for deposit or delivery according to protocol and fulfilling all contractual obligations. For example, failing to promptly distribute funds, deeds, or personal property pursuant to escrow instructions is a breach of contract and subject to a bond claim.
What Other Insurance Products Can Agents Offer Escrow Agencies in Idaho?
The Idaho Department of Finance requires escrow agencies to purchase coverage for a $50,000 Errors and Omissions policy, which is just another name for professional liability insurance. Bonds are our only business at BondExchange, so we do not issue any other types of 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 Idaho Escrow Agency Customers?
The Idaho Department of Finance conveniently provides a public database to search for active escrow 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.