Indiana Collection Agency Bond: A Comprehensive Guide
This guide provides information for insurance agents to help collection agencies obtain Indiana Collection Agency Bonds
At a Glance:
- Lowest Cost: $100 per year or $10 per month
- Bond Amount: $5,000 per licensed branch location
- Who Needs it: All collection agencies seeking to obtain a license in Indiana
- 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 Indiana: The Indiana Secretary of State, Securities Division
Indiana statute 25-11-1 requires all collection agencies operating in the state to obtain a license with the Secretary of State Securities Division. The Indiana 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 $5,000 surety bond (per branch location) to be eligible for licensure.
What is the Purpose of the Indiana Collection Agency Bond?
Indiana 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 set forth in Indiana statute 25-11-1. Specifically, the bond protects consumers in the event the collection agency does not properly account for all funds received and fails to forward funds to creditors. In short, the bond is a type of insurance that protects the public if the collection agency breaks licensing laws.
How Can an Insurance Agent Obtain an Indiana Collection Agency Surety Bond?
BondExchange makes obtaining an Indiana 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.
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Is a Credit Check Required for the Indiana Collection Agency Bond?
No, a credit check is not required for the Indiana Collection Agency Bond. Since the bond is considered relatively low risk, the same rate is offered to all Collection Agencies in Indiana.
How Much Does the Indiana Collection Agency Bond Cost?
The Indiana Collection Agency Bond cost just $100 per year or $10 per month.
How Does Indiana Define “Collection Agency?”
Indiana statute 25-11-1-1 defines a collection agency as any business entity that engages in one or more of the following activities:
- Collects claims from a debtor on behalf of a creditor or solicits the collection of claims
- Sells, furnishes or maintains a letter or written demand service
- Uses a fictitious name in the collection of accounts receivable with the intention of conveying to the debtor that a third person has been employed
Exemptions to this definition include:
- Persons employed as credit men or in a similar capacity except as independent contractors
- Licensed real estate brokers
- Utility 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 Collection Agencies Apply for a License in Indiana?
Collection agencies in Indiana must navigate several steps to secure their license. Below are the general guidelines, but applicants should refer to the NMLS’s application guidelines for details on the process.
License Period – The Indiana Collection Agency License expires on December 31 of each year and must be renewed before the expiration date
Step 1 – Purchase a Surety Bond
Collection agencies must purchase and maintain a $5,000 surety bond per branch location
Step 2 – Request a NMLS Account
The Indiana 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 3 – Complete the Application
All Indiana Collection Agency License applications can be completed online through the NMLS. Applicants must complete the entire application, and submit the following items:
Collection agencies must pay both a $100 application fee and a $100 processing fee when submitting their license application.
How Do Indiana 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 Indiana Collection Agency License expires on December 31 of each year and must be renewed before the expiration date.
What Are the Insurance Requirements for the Indiana Collection Agency License?
The State of Indiana 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 $5,000 surety bond per branch location.
How Do Indiana Collection Agencies File Their Bond?
Collection agencies should submit the completed bond form, including the power of attorney, electronically through the NMLS. The 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 and NMLS number of entity/individual(s) buying the bond
- Surety company’s name, phone number, and NAIC number
- Date the bond is signed
What Can Indiana Collection Agencies Do to Avoid Claims Against Their Bond?
In order to avoid claims made against their bond, collection agencies in Indiana must follow all license regulations in the state. Specifically, collection agencies must ensure they properly account for all funds received from debtors.
What Other Insurance Products Can Agents Offer Collection Agencies in Indiana?
Indiana does not require collection agencies to purchase any form of liability insurance as a prerequisite to obtaining a business license. However, most reputable businesses 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 Indiana Collection Agency Customers?
The NMLS conveniently provides a public database to search for active collection agencies providers in Indiana. The database can be accessed here. Contact BondExchange for aditional marketing resources. Agents can also leverage our print-mail relationships for discounted mailing services.