Texas Title Insurance Agent’s Minimum Capitalization Bond: A Comprehensive Guide
This guide provides information for insurance agents to help their customers obtain a Texas Title Insurance Agent’s Minimum Capitalization bond.
At a Glance:
- Lowest Cost: $94 per year or $10 a month
- Bond Amount: Determined on a case-by-case basis (more on this later)
- Who Needs It: Title insurance agents in Texas that do not meet the minimum capitalization licensing requirements
- Purpose: To protect the public from financial harm if the title insurance agent commits fraud or engages in unfair business practices
- Who Regulates Title Insurance Agents in Texas: The Texas Department of Insurance
Background
If a title insurance agent does not meet the minimum capitalization licensing requirements stated in Texas Insurance Code 2651.012, the title insurance agent must acquire a surety bond. The Texas Legislature enacted the licensing requirement to ensure that title insurance agents do not engage in unethical business practices. To provide financial security for the enforcement of the licensing law, title insurance agents must purchase and maintain a surety bond to be eligible for licensure.
What Is the Purpose of the Texas Title Insurance Agent’s Minimum Capitalization Bond?
In cases where a title insurance agent does not meet the state’s minimum capitalization requirements, the Department of Insurance then requires the title insurance agent to purchase an additional 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 title insurance agent fail to abide by the regulations outlined in the Texas Insurance Code Title 11, Chapter 2651. Specifically, the bond protects claimants if the title insurance agent commits fraud or engages in unfair business practices. In short, the bond is a type of insurance that protects the public if the title insurance agent violates the terms of their license.
How Can an Insurance Agent Obtain a Texas Title Insurance Agent’s Minimum Capitalization Bond?
BondExchange makes obtaining a Texas Title Insurance Agent’s Minimum Capitalization bond easy. Simply log in to your account and use our keyword search to find the “title insurance agent” 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?
The limit for the Title Insurance Agent’s Minimum Capitalization bond must be equal to the minimum capitalization required for the population of the county in which the title insurance agent’s office is located. See below for further details:
- Principal office is located in a county with a population of 10,000 to 50,000: a $25,000 bond limit is required
- Principal office is located in a county with a population of 50,000 to 200,000: a $50,000 bond limit is required
- Principal office is located in a county with a population of 200,000 to 1,000,000: a $100,000 bond limit is required
- Principal office is located in a county with a population of more than 1,000,000: a $150,000 bond limit is required
Is a Credit Check Required for the Texas Title Insurance Agent’s Minimum Capitalization Bond?
Surety companies will run a credit check on the title insurance agent to determine eligibility and pricing for the Texas Title Insurance Agent’s Minimum Capitalization bond. Title insurance agents with excellent credit and work experience can expect to receive the best rates. Agents 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 Texas Title Insurance Agent’s Minimum Capitalization Bond Cost?
The Texas Title Insurance Agent’s Minimum Capitalization 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 $25,000 requirement.
$25,000 Texas Title Insurance Agent’s Minimum Capitalization Cost
| Credit Score* | Bond Cost (1 Year) | Bond Cost (1 month) |
|---|---|---|
| 720+ | $94 | $10 |
| 680 – 719 | $113 | $12 |
| 660 – 679 | $175 | $18 |
| 649 – 659 | $250 | $25 |
| 629 – 648 | $375 | $38 |
| 600 – 628 | $625 | $63 |
| 580 – 599 | $875 | $88 |
| 550 – 579 | $1,000 | $100 |
| 525 – 549 | $1,250 | $125 |
| 500 – 524 | $1,500 | $150 |
*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 Texas Define “Title Insurance Agent”?
To paraphrase the various tasks stated in Texas Insurance Code Title 11, Chapter 2651, a title insurance agent is a third party hired by a title insurer to solicit, procure, and/or negotiate title insurance contracts on behalf of a title insurer. This also includes providing escrow, closing, or settlement services.
Exemptions to this definition include the following:
- Banks
- Trust companies
- Lending institutions
- Mortgage brokerages or mortgage guaranty companies
- Attorneys licensed to practice in the State of Texas
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 Title Insurance Agents Become Licensed in Kansas?
Title insurance agents in Texas must navigate several steps to obtain a license. Below are the general guidelines, but applicants should refer to the Department of Insurance’s Title Insurance webpage for details on the process.
License Period – Per the Texas Department of Insurance, title insurance agent licenses expire on June 1st following the initial license issuance date.
Step 1 – Purchase a Surety Bond
A Title Insurance Agent bond must be purchased and maintained for the entire duration of the agent’s license term. If a title insurance agent does not meet the minimum capitalization requirements stated in Texas Insurance Code 2651.012, the title insurance agent must provide an additional surety bond i.e. the Title Insurance Agent’s Minimum Capitalization Bond.
Step 2 – License Application
Via Sircon, applicants are to complete and submit an application under the “New Insurance License” prompt. Further details on what requirements and documents are needed can be found on the Title License Application Documents webpage. An application fee of $50 is also mandated.
How Do Title Insurance Agents in Texas Renew Their Licenses?
Upon the annual expiration date (June 1st), the renewal of a title insurance agent license must be completed online through the Sircon website. A renewal application fee of $50 is required.
What Are the Insurance Requirements for Title Insurance Agents in Texas?
Texas does not require title insurance agents to purchase any form of liability insurance as a prerequisite to obtaining a license. Title insurance agents must purchase and maintain a surety bond.
How Do Title Insurance Agents File Their Bonds in Texas?
Title insurance agents in Texas should submit their completed bond forms, including the power of attorney, electronically when submitting their license applications. The surety bond requires signatures from the surety company and the title insurance agent. The surety company should include the following information on the bond form:
- Legal name and address of the individual buying the bond
- Surety company’s name
- Date the bond is signed
What Can Title Insurance Agents Do to Avoid a Claim Against Their Surety Bond?
The easiest way to avoid a claim as a title insurance agent is to comply with all applicable license regulations. Common actions that can cause an official bond claim are listed below:
- Negligence
- Default
- Misrepresentation
- Fraud
What Other Insurance Products Can Agents Offer Title Insurance Agents in Texas?
Most reputable title insurance agents will purchase business 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 Title Insurance Agents Customers in Texas?
Texas conveniently provides a public database to search for active title insurance agents 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.