Companies offering insurance premium financing must provide an Alabama premium finance company bond and fulfill all statutory requirements before commencing business operations. Alabama defines an insurance premium finance company is a person engaged in the business of entering into agreements by which an insured or prospective insured promises to pay to a premium finance company the amount advanced or to be advanced under the agreement to an insurer or to an insurance agent or broker in payment of premiums on an insurance contract together with a service charge. The Alabama insurance premium finance company bond must be written in the amount of $35,000, and issued by a corporate surety company with a current certificate of authority from the Alabama Commissioner of Insurance. The bond obligation appears to be a fairly straightforward compliance agreement, however a reading of Title 27, Chapter 40 is necessary to understand exactly what the surety is guaranteeing. The Alabama premium finance company bond ensures payment of actual damages sustained as the direct result of a breach by the finance company of a condition of the law. In no event can the surety be liable for fines and/or penalties assessed against the Principal for violations of the same. Although the face sheet states clearly that the bond shall be continuous and “shall operate as a new bond for each license year it is in effect”, the bond is NOT cumulative. Surety may cancel the Alabama premium finance company bond at any time by giving thirty (30) days’ written notice of its intent to cancel to both the licensee and to the Commissioner of Insurance by certified or registered U.S. mail. Upon receipt of said notice the state must discharge the surety from any liability occurring after the effective date of the cancellation. National surety leader, Surety One, Inc., specializes in bonds for the insurance and financial services sector. We will offer terms to ALL applicants for this bond class regardless of temporary fluctuations in applicant financial condition. We also offer very broad fidelity bond coverages for finance company enterprises. Visit SuretyOne.com, call (787) 333-0222 or (800) 373-2804, or email Underwriting@SuretyOne.com for a Alabama premium finance company bond application or information about premium finance company bond support in any state where you wish to obtain a license.
