What Is an Ohio Surplus Lines Broker Bond?
Individuals and businesses who want to run a surplus line brokership in Ohio have to get a state license allowing their activities. You are required to post a surplus lines broker bond in order to obtain your Ohio surplus lines broker license.
Your surety bond works as a safety mechanism that protects the state and your customers against potential illegal activities you may engage in as a surplus lines broker. In this sense, the bond ensures your compliance with applicable sections of the Ohio Revised Code.
The bond that you obtain is, in essence, a contract between your surplus lines business as the principal, the Ohio Insurance Department as the obligee, and the surety that provides the bond.
Questions about Surplus Lines Broker Bonds in Ohio
When do I need to obtain this broker bond?
If you wish to launch a surplus lines insurance business in Ohio, either as an individual or as an entity, you have to get licensed with the state Department of Insurance. One of the requirements that you have to fulfill is to provide a $25,000 surety bond. It ensures that you will follow Sections 3905.30 – 3905.37 of the Ohio Revised Code that govern the operations of surplus lines brokers.
How is the bond cost formulated?
Ohio surplus lines brokers have to get a bond amount of $25,000. It is different from the bond premium which you will end up paying, which is only a fraction of it. If your finances are in good shape, the typical bond rates are about 1%-5% of the bond amount.
What factors determine your surety bond cost? Among the most important ones are your personal credit score, business finances, liquidity and assets, and professional knowhow. By examining these criteria, your bond provider can establish how risky it is to provide you with the necessary bonding. The more stable your overall profile is, the smaller your bond premium should get.
|Surety bond name||Surety bond amount||Above 700||Between 650-699||Between 600-649||Below 599|
|Ohio surplus lines broker bond||$25,000||$187.5-$375||$250-$625||$625-$1,250||$1,250-$2,500|
What happens if I have bad credit?
Even if you have a low credit score, tax liens, bankruptcies, or civil judgements, you can get bonded with Lance Surety Bonds. We have designed our Bad Credit Surety Bonds program for applicants facing financial issues as listed above.
The rates for bad credit bonds are usually between 5% to 10%. Even though the prices are slightly higher, we can still offer you top bonding options due to our close relationships with numerous A-rated, T-listed surety companies.
How do I apply for a surplus lines broker bond?
Would you like to learn more about the way bonding works? Don’t hesitate to consult our in-depth How to Get Bonded page.
For any other questions, you can contact Lance Surety Bonds’ experts for assistance. Just reach us at (877) 514-5146.
How are bond claims handled for surplus lines brokers?
Unlike insurance, your surplus lines broker bond does not protect your business. Instead it safeguards your customers and the state against fraud and misuse you may engage in while conducting your professional activities. In such cases, a harmed party can file a claim against your bond.
On proven claims, the maximum compensation that can be sought is the penal sum of your bond, namely $25,000. You are responsible for any costs incurred, even though your surety may at first cover them. This means that bond claims can lead to serious financial losses, so it is best to avoid them altogether.