According to the FBI, of the $80 billion in government funding appropriated for reconstruction after Hurricane Katrina in 2005, an estimated $6 billion could be attributed to insurance fraud. Victims of natural disasters like the recent hurricanes in Texas and Florida and wildfires in California need qualified advocates to help deal with the aftermath. That’s why most states require licensing for public adjusters.
WHAT IS A PUBLIC ADJUSTER?
Public adjusters investigate, negotiate and settle a claim with an insurance company. These professionals are hired by insurance policy holders after disasters.
WHAT DOES THE BOND GUARANTEE?
Public adjuster surety bonds guarantee that the adjuster will not cause harm to the insured and will act faithfully in accordance with the state’s applicable laws, such as proper accounting, reporting, and use of specified contract language. Some bonds guarantee recovery of damages by the state’s Department of Insurance if the adjuster is found guilty of fraud or unfair practices.
HOW IS THE BOND’S PENAL SUM DETERMINED?
Each jurisdiction sets its own basis for the penal sum. Frequently, these bonds are required in the amount of $20,000, but may range as low as the Ohio requirement of $1,000 or as high as $50,000, as found in Louisiana, Tennessee and Virginia.
HOW IS UNDERWRITING DETERMINED FOR THESE BONDS?
The underwriting is determined by the bond amount, the state’s specific guarantee requirements and the industry loss ratios. The majority of these bonds are written instantly or only require a signed application.
ARE THESE BONDS RENEWABLE?
Yes, in most cases these bonds are renewable.
HOW DO I GET A SURETY BOND?
Contact your local insurance agent. They will guide you through the process, informing you of what documents and information are needed by the surety (Merchants Bonding Company (Mutual)) to underwrite your bond.
WHAT IS A SURETY BOND?
A surety bond is a three-party agreement that ensures the fulfillment of a commitment or contract. For instance, the surety (Merchants Bonding Company (Mutual)) may provide a surety bond to a construction company (the principal) which is required by the state (the obligee), ensuring the construction company will perform the duties as outlined in the contract. In bonding the construction company, Merchants assumes the risk should the company default or not fulfill their contract. A surety bond is different from traditional insurance in that the principal is obligated to pay back the surety company on any claims paid out.
All information provided is subject to change.