Public Adjuster Bond: A Comprehensive Guide For Insurance Agents
This guide provides information for insurance agents to help their customers obtain a Public Adjuster bond.
What Is a Public Adjuster Bond?
A Public Adjuster bond, sometimes referred to as an insurance adjuster bond, is a government-required surety bond that public adjusters must purchase as a prerequisite to obtaining a professional or business license. Public adjuster bonds protect insureds from financial harm if the public adjuster violates the terms of their license by committing fraud or engaging in unfair business practices. For example, if a public adjuster fails to pay an insured their settlement funds, then the insured could file a claim against the public adjuster’s bond to recover their losses.
Public adjuster bonds must remain active for as long as the adjuster is licensed.
Unlike most insurance products, surety bonds protect a third party (the obligee) from acts that violate the law. When the surety company suffers a loss due to a public adjuster’s actions, the adjuster must repay to the surety company any losses and sometimes court costs and other fees.
Who Is Required to Purchase a Public Adjuster Bond?
Twenty-six states require public adjusters to be bonded (more on this later). State definitions vary on who is considered a public adjuster, but the general room of thumb is that individuals and businesses that act on behalf of or aid insureds in negotiating the settlement of insurance claims must purchase a bond in states with a Public Adjuster bond requirement. Public adjusters differ from other types of adjusters in that they represent the insured as opposed to the insurer.
Common exemptions to the above definition include:
- Licensed attorneys
- Employees of an insurer or managing general agency (MGA)
Who Regulates Public Adjuster Bonds?
State government agencies regulate public adjuster bonds based on license law written by each state’s legislature. Governments enforce the law by instituting licensing requirements like educational requirements and a surety bond. The surety bond ensures that insureds will be compensated if the public adjuster violates the terms of their license.
How Can an Insurance Agent Obtain a Public Adjuster Surety Bond?
BondExchange makes obtaining a Public Adjuster bond easy. Simply log in to your account and use our keyword search to find the “public adjuster” 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 at (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 to Purchase a Public Adjuster Bond?
The underwriting requirements for Public Adjuster bonds differ by state. Some Public Adjuster bonds are considered low risk and are instantly issued at a consistent price, regardless of the adjuster’s credit history. Other Public Adjuster bonds are considered to be riskier and surety underwriters will review the adjuster’s personal credit to determine their eligibility and rate. The credit check is a “soft check”, so the credit review will not affect the adjuster’s credit. Underwriters will consider other aspects of the adjuster’s application, but credit scores and their underlying data remain the primary underwriting tool for Public Adjuster bonds that are not issued instantly.
How Much Does a Public Bond Cost?
Low-risk public adjuster bonds can cost as low as $100 per year or $10 per month (BondExchange is the only wholesale surety company to offer monthly subscriptions).
The premium rate for Public Adjuster bonds subject to underwriting requirements will depend on the adjuster’s credit and business experience. The chart below offers a quick reference for the approximate cost of a $50,000 Public Adjuster bond.
$50,000 Public Adjuster Bond Cost
|Credit Score*||Bond Cost (1 Year)||Bond Cost (1 month)|
|625 – 719||$500||$50|
|600 – 624||$1,250||$125|
|575 – 599||$1,500||$150|
|550 – 574||$2,500||$250|
|500 – 549||$3,500||$350|
*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.
What Information Is Collected for a Public Adjuster Bond Application?
Surety company underwriters will collect and review the following information to determine eligibility and rate for a public adjuster bond:
- Adjuster’s legal name (and DBA if applicable), address and phone number
- Years in business
- Contact phone number
- Owner(s) name, address, and social security number (if subject to underwriting)
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 Public Adjusters File Their Bonds?
Surety bond companies will provide the public adjuster with a completed surety bond to be filed with the relevant government agency either online when submitting their license applications or by mail.
Surety companies should include the following information on most bond forms:
- Legal name and address of entity/individual(s) buying the bond
- Surety company’s name, address and phone number
- Bond amount
- Signatures of the surety representative
- Date the bond is effective and issued
- Corporate seal of the surety company
- Power of Attorney
What Can Public Adjusters Do to Avoid Claims Against Their Bond?
To avoid claims against their bonds, public adjusters must follow all license regulations in their state. Best practices for avoiding claims include:
- Not engaging in acts of fraud
- Not engaging in unfair business practices
- Pay all claims and settlement funds owed to insureds
What Other Insurance Products Can Agents Offer Public Adjusters?
Most states do not require public adjusters to purchase any form of liability insurance as a prerequisite to obtaining a license (Excluding Tennessee, which requires each resident adjuster to purchase $500,000 worth of errors and omissions insurance). However, reputable public adjusters will purchase liability insurance anyway. Bonds are our only business at BondExchange, so we do not issue any other forms of insurance, but our agents often utilize brokers on these lines. A list of brokers in the lottery retailer space can be found here.
Which States Require Public Adjusters to Purchase a Surety Bond?
The following states require public adjusters to purchase and maintain a surety bond (click on the state for a comprehensive guide on the bond requirement).