A Michigan premium finance company bond is required along with certain capitalization minimums before the Department of Insurance will issue an insurance premium finance company license. Pursuant to §500.1502, an “insurance premium finance company” is defined as a person engaged in the business of entering into insurance premium finance agreements. “Insurance premium finance agreement” means an agreement 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 in payment of premiums on an insurance contract together with a service charge. The Michigan insurance premium finance company bond is required by ALL parties engaged in these services except for insurance companies and banks chartered within the state. The license applicant must provide evidence to the Commissioner that he or she has paid-up capital and surplus of $50,000.00, if a corporation, or net worth if an individual or copartnership of $50,000.00 which must be maintained throughout the license period. The $10,000.00 Michigan premium finance company bond must run to the State Treasurer for the benefit of any or all borrowers, who may become creditors of the premium finance company. The obligation is a very simple compliance form, stating that the licensee agrees not to directly or indirectly violate the provisions of P.A. 352 of 1968 and any amendments to the same. The bond is not cumulative. Although the surety bond states, “Surety is liable for any claims that accrue from the effective date of the bond until cancellation.”, there is limited language capping the aggregate at $10,000. The Michigan insurance premium finance company surety bond may be canceled by surety by giving written notice to the Commissioner of Insurance at least sixty (60) days prior to the cancellation date. In order to fully understand the nature of the obligation and surety’s full guarantee, a reading of the regulating statute is necessary. The Department of Insurance and Financial Services website is an excellent source for instructions on preparation of the premium finance company license and bond applications, and contains a link to the statute for review. The contact for submission of the bond paperwork is DIFS – Consumer Finance, P.O. Box 30220, Lansing, MI 48909.
Michigan surety leader, Surety One, Inc., specializes in surety bonds for the insurance and financial services sector. We offer terms to ALL applicants for this bond class regardless of temporary changes in applicant financial condition. We also offer 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 Michigan premium finance company bond application or information about premium finance company bonding for any state where you wish to expand.
