What Is an Illinois Insurance Producer Bond?
Getting an Illinois insurance producer license in order to operate in the state requires meeting a number of requirements. One of them is to obtain an insurance producer bond, which guarantees your legal compliance.
The purpose of the bonding is to ensure that you will abide by all applicable laws. In case you transgress from them, the bond functions as a security for harmed parties
Your surety bond is, in essence, a contract between three entities. Your insurance producer business is the principal. The Illinois Department of Insurance is the obligee that requires the bond. The surety is the third party that backs up your company by getting you bonded.
Questions about Insurance Broker Bonds in Illinois
When is this bond required?
Every entity that wants to operate as an insurance producer in Illinois has to undergo the licensing procedure set by the state Department of Insurance.
As a part of the process, you have to provide a surety bond in an amount between $2,500 and $50,000. You have to use the official bond form. The bond’s purpose is to guarantee you will follow the Illinois Insurance Code and any other relevant rules.
What is the Illinois insurance producer bond cost?
The bond amount that you have to provide as an Illinois insurance provider is the greater amount between $2,500 or 5% of your yearly brokered premiums. The maximum bond amount you may need to post is $50,000. The actual surety bond cost is different from this bond amount, and this is your bond premium. It is typically between 1% to 5%, in case your finances are stable.
The most important factors that your surety considers when you apply for a bond include your personal credit score, as well as business financials and assets and liquidity. Your professional experience may also be accounted for.
On the basis of these criteria, it assesses the level of bonding risk that you pose. This is how it determines your exact bond price, with lower costs associated with lower bonding risk.
|Surety bond name||Surety bond amount||Above 700||Between 650-699||Between 600-649||Below 599|
|Illinois insurance producer bond||$2,500 to $50,000||$100 to $375-$750||$100 to $500-$1,250||$100-$125 to $1,250-$2,500||$125-$250 to $2,500-$5,000|
What if I have bad credit?
Even if your finances are problematic, you can still get bonded with Lance Surety Bonds. We are operating our Bad Credit Surety Bonds program for applicants with issues such as low credit scores, tax liens, bankruptcies, and civil judgements.
Since the bonding risk is higher, the premiums are in the range of 5%-10%. You can still get a great bonding rate with us, though. Due to our close partnerships with numerous A-rated, T-listed surety companies, we can shop around and find the best matching bonding option for your particular case.
How do I apply for this surety bond?
Would you like to learn more details about the bonding process? You can consult our elaborate overview in our How to Get Bonded page.
Do you have questions or need help with your bond application? You can reach us at (877) 514-5146 to speak to one of our bonding experts.
How is the bond claims process handled?
Unlike insurance, your Illinois insurance producer bond does not protect your business. It is a safety mechanism designed to safeguard the interests of your customers. In case you engage in fraudulent or illegal actions in your capacity as insurance producer, you can end up with a claim against your bond.
The maximum reimbursement that harmed parties can seek is equal to the bond amount you have posted. If the claim is proven, you have to provide the compensation. At first, your surety may pay the costs to ensure a quick resolution of the case. You are fully liable, though, so you have to repay it soon after.
Bond claims can be a serious financial threat to your business, so it is best to avoid them as much as possible.