Wisconsin Adjustment Service Company Bond: A Comprehensive Guide
This guide provides information for insurance agents to help Adjustment Service Companies obtain Wisconsin Adjustment Service Company Bonds
At a Glance:
- Lowest Cost: 1.5% of the bond amount per year based on the applicant’s credit
- Bond Amount: $5,000 per office location
- Who Needs it: All adjustment service companies operating in Wisconsin
- Purpose: To ensure the public will receive compensation for any damages should the adjustment service company fail to comply with licensing law
- Who Regulates Adjustment Service Companies In Wisconsin: The Wisconsin Department of Financial Institutions
Wisconsin statute 218.02 requires all adjustment service companies operating in the state to obtain a license with the Department of Financial Institutions. The Wisconsin legislature enacted the licensing laws and regulations to ensure that adjustment service companies engage in ethical business practices. To provide financial security for the enforcement of the licensing law, adjustment service companies must purchase and maintain a $5,000 surety bond (per office location) to be eligible for licensure.
What is the Purpose of the Wisconsin Adjustment Service Company Bond?
Wisconsin requires adjustment service companies 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 adjustment service company fails to comply with the licensing regulations outlined in Washington statute 218.02. Specifically, the bond protects the public in the event the adjuster engages in any acts of fraud or breaches any contracts made with consumers. In short, the bond is a type of insurance that protects the public if the adjustment service company breaks licensing laws.
How Can an Insurance Agent Obtain a Wisconsin Adjustment Company Bond?
BondExchange makes obtaining a Wisconsin Adjustment Company Bond easy. Simply login to your account and use our keyword search to find the “adjustment” 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 Wisconsin Adjustment Service Company Bond?
Surety companies will run a credit check on the owners of the adjustment service company to determine eligibility and pricing for the Wisconsin Adjustment Service Company bond. Owners 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 Wisconsin Adjustment Service Company Bond Cost?
The Wisconsin Adjustment Service Company Bond can cost anywhere between 1.5% to 5% of the bond amount per year. Insurance companies determine the rate based on several factors including your customer’s credit score and experience. The chart below offers a quick reference for the approximate bond cost on a $10,000 bond requirement.
$10,000 Adjustment Service Company Bond Cost
|Credit Score||Bond Cost (1 year)||Bond Cost (1 month)|
|650 – 799||$200||$20|
|600 – 649||$400||$40|
|450 – 599||$500||$50|
How Does Wisconsin Define “Adjustment Service Company?”
To paraphrase Wisconsin Statute 218.02(1)(a), an adjustment service company is any business entity who provides budgeting and other similar debt adjustment services to consumers.
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 Adjustment Service Companies Apply for a License in Wisconsin?
Adjustment service companies in Wisconsin 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 Term – The Wisconsin Adjustment Service Company License expires on December 31 of each year and must be renewed before the expiration date
Step 1 – Meet the Net Worth Requirements
Applicants for the Wisconsin Adjustment Service Company License must amass a net worth (assets – liabilities) of at least $6,000 as well as always maintaining positive working capital (current assets – current liabilities). Adjustment service companies must submit financial statements verifying their net worth when submitting their license application.
Step 2 – Purchase a Surety Bond
Adjustment service companies must purchase and maintain a surety bond with a limit of $5,000 per office location
Step 3 – Request an NMLS Account
The Wisconsin Adjustment Service Company 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 4 – Complete the Application
All Wisconsin Adjustment Service Company License applications can be completed online through the NMLS. Completed applications will include the following items:
- Company financial statements
- The following company contacts:
- Primary consumer complaint
- Consumer complaint (public)
- Exam delivery
- Disclosure questions
- Company business plan containing the following information:
- Marketing strategies
- Target markets
- Fee schedule
- Operating structure
- Management Team
- Records Maintenance
- Certificate of good standing
- The following document samples:
- Debt management agreement use with consumers
- Standard forms
- Standard form letters
- Educational brochures given to consumers
- Flow of funds structure
- Company management and organizational charts
- Supplemental questions form
Adjustment service companies must pay the following fees when submitting their license application:
- $200 license fee
- $200 application fee
How Do Wisconsin Adjustment Service Companies Renew Their License?
Adjustment service companies can renew their license online through the NMLS. License holders need to simply login to their account to access their renewal application. The Wisconsin Adjustment Service Company License expires on December 31 of each year and must be renewed before the expiration date
What Are the Insurance Requirements for the Wisconsin Adjustment Service Company License?
Wisconsin does not require adjustment service companies to obtain any form of liability insurance as a prerequisite to obtaining a business license. Adjustment service companies must purchase and maintain a surety bond with a limit of $5,000 per office location.
How Do Wisconsin Adjustment Service Companies File Their Bond?
Adjustment service companies 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 adjustment service company. 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 Wisconsin Adjustment Service Companies Do to Avoid Claims Against Their Bond?
To avoid claims made against their bond, adjustment service companies in Wisconsin must follow all license regulations in the state. Including some of the most important issues below that tend to cause claims:
- Do not engage in any acts of fraud
- Do not breach any contracts made with consumers
What Other Insurance Products Can Agents Offer Adjustment Service Companies in Wisconsin?
Wisconsin does not require adjustment service companies 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 Wisconsin Adjustment Service Company Customers?
The NMLS conveniently provides a public database to search for active adjustment service companies in Wisconsin. The database can be accessed here. Contact BondExchange for help developing a marketing piece. Agents can also leverage our print-mail relationships for discounted mailing services.