A surplus lines broker bond is a specific surety bond required by many state departments of insurance. The license allows producers to offer surplus lines insurance. Surplus lines insurance refers to any instance in which the insurance is offered by an insurer that is not licensed in the same state as the insured risk. Generally, this type of transaction is handled by a specialty producer, referred to as a surplus lines broker. The broker creates the opportunity between the insurer of the risk and the customer with the risk when the insured has not been able to procure the coverage in the admitted markets.

Why is a surety bond necessary?

This is a license or permit bond (L&P) that specifically protects the state as well as consumers from fraudulent acts that could occur as a result of the insurance broker’s actions or ommissoins. The costs, timeline, and other requirements for these bonds fall along state lines. An organization operating as a surplus lines broker must obtain a bond in each jurisdiction where he or she markets the product.

The surplus lines broker bond provides a contract between three people. The principal of the bond is the insurance broker who has the requirement to obtain the bond. The oblige is the organization imposing the requirement for the body, most often the state. And, the surety is the organization underwriting the bond and providing a third party guarantee of the insurance broker’s conduct. In situations where the insurance broker fails to conduct business compliance with regulations the surplus lines broker bond provides financial assurance for those who suffer loss up to the total bond amount or bond penalty.

Sample State Rules on the Surplus Lines Broker Bond

Each state’s insurance statutes dictate whether or not a surety bond is required. Here are some examples of such requirements (You can obtain full information about any specific state’s rules by contacting our office directly).


Under Alabama Title 27, Code of Alabama 1975, Sections 27-10-1 thru 3, Sections 27-10-20 thru 38 and Section 27-10-50 thru 56 of the Code of Alabama, resident surplus brokers with proper qualifications must file a $50,000 surety bond, though non-residents are exempt from the bond requirement if they are bonded in their home states.


In California, the California Producers Licensing Bureau sets the rules for surplus lines brokers. This requirement is currently a $50,000 surety bond and for special lines brokers, a $10,000 bond. This is set forth through Chapter 6, Part 2, Division 1 of the Insurance Code of California.


The Florida Department of Financial Services places a requirement of a $50,000 surety bond for organizations conducting business within the state. This is covered under the Surplus Lines Law, Part IV of Chapter 626, Section 626.913 through 626-937 of the state’s statutes.


A required $50,000 surety bond is necessary for those operating in the state of Georgia. The Official Code of Georgia Annotated Sections 33-5-20 thru 33-5-35 sets forth these rules.


The Kentucky Department of Insurance provides licensing and bond requirements for those operating within the state. This is a requirement for a $50,00 surplus lines broker bond per Kentucky Revised Statutes, Section KRS 304.


Ohio law requires the filing of a surplus lines broker bond of $25,000. This is outlined in Section 3905.35 of the Revised Code of Ohio.

This is only a small set of examples of states requirements. Any insurance agent desiring to provide surplus lines coverage as a part of their professional practice must read and understand his or her state’s specific laws regulating surplus lines bonds. Class-specific written examinations and/or pre-licensing training may also be among state requirements.

Securing the Surplus Lines Broker Bond for Your Insurance Brokerage

Individuals who require a surplus lines broker bond can expect quick, efficient processing by Surety One, Inc.. Our team offers same-day quoting and delivery of surety bonds for these needs in all states. If you have questions about this or other surety bonds call us at (800) 373-2804, email Underwriting@SuretyOne.com, or chat live with our surplus lines broker bond specialists right now.