What Is an Arkansas Surplus Lines Insurance Broker/Producer Bond?
Surplus lines insurance brokers and producers in Arkansas have to get licensed with the state Insurance Department prior to conducting their activities. Among the main requirements you have to meet is to post a surplus lines insurance broker bond.
Your surety bond functions as an extra layer of protection for the state and for your customers. It can provide a financial compensation to harmed parties if you fail to abide by applicable laws, such as the Arkansas Insurance Code.
Similarly to all other Arkansas surety bonds, this bond is a contract between three entities. Your surplus lines insurance company is the principal. The Arkansas Insurance Department is the obligee that imposes the bonding. The third party is the surety that provides the bond.
Questions about Surplus Lines Broker Bonds in Arkansas
When do I need to get this bond?
Surplus lines insurance brokers and producers in Arkansas need to undergo a licensing process that ensures their suitability for conducting their activities. The state Insurance Department requires posting a $50,000 surety bond as a part of the process in the official bond form. Its goal is to guarantee that you will comply with the Arkansas Insurance Code.
What’s the surety bond cost?
The bond amount that you have to post as an Arkansas surplus lines insurance broker or producer is $50,000. You have to cover a small percentage of it, which is called the bond premium. It is typically about 1%-5% of the bond amount in case your finances and overall profile are solid.
|Surety bond name||Surety bond amount||Above 700||Between 650-699||Between 600-649||Below 599|
|Arkansas surplus lines insurance broker/producer bond||$50,000||$375-$750||$500-$1,250||$1,250-$2,500||$2,500-$5,000|
How is your bond price determined? Your surety has to take a close look at your financial situation in order to assess your surety bond cost. It examines your personal credit score, business finances, liquidity and assets, and business knowhow. On the basis of these factors, it judges how risky it is to provide you with a bond. Your premium is likely to be lower if your application is strong.
What if my finances are problematic?
It is still possible to get bonded with Lance Surety Bonds - even if your finances are not perfect. Applicants who have a low credit score, tax liens, bankruptcies, or civil judgements can benefit from our Bad Credit Surety Bonds program.
As the bonding risk is higher, the bad credit bond rates are around 5% to 10%. However, you can still get a great bond price with us. We work with a long list of A-rated, T-listed surety companies, which allows us to shop around for the most appropriate bond option for you.
How do I obtain an Arkansas surplus lines insurance broker/producer bond?
Need more information about the way bonding works? You can delve into the details in our in-depth How to Get Bonded page.
Lance Surety Bonds’ experts are here to assist you with your questions or bond application. Just call us at (877) 514-5146.
What if my business gets a bond claim?
If you fail to follow the law and engage in fraudulent or unethical activities as a surplus lines insurance broker or producer, you may end up with a claim against your bond. This is how the bonding can provide protection for the state and for your customers.
A harmed party can seek a financial compensation up to your bond amount, which is $50,000. If the case is proven, you will have to pay the reimbursement. Initially, it is your surety that covers the costs. You are liable to repay it afterwards as set in the bond indemnity agreement. This makes bond claims a costly matter that is best to be avoided.