A California surplus lines broker bond is required pursuant to California Insurance Code (1765(c)). "An applicant for a surplus line broker's license shall as a condition of the issuance of the license, file a surety bond to the people of the State of California in the sum of fifty thousand dollars ($50,000), conditioned that the licensee will fully and faithfully comply with the requirements of this chapter, and all applicable provisions of this code. The bond shall be subject to Sections 1662 and 1663. A California surplus line broker bond is not required for an individual licensed as a surplus line broker who transacts only on behalf of a licensed surplus line broker organization."The Commissioner of Insurance may issue a license authorizing any applicant who is "trustworthy and competent" to transact an insurance brokerage business in a manner as to safeguard the interest of the broker's insureds. In order to ensure an appropriate level of expertise, subsection (f) of the statute requires the owners and/or directors of a license brokerage to provide at minimum two hours of training following a curriculum developed by the California surplus lines advisory organization. The training must be provided to the insurance brokerage's employees who solicit, negotiate, or effect insurance coverage placed with a non-admitted insurer, then repeated every five years. The state-specific bond form, California "Bond of a Surplus Line Broker" is a fairly simple compliance obligation on its face. A deeper look at the Code underlying the obligation reveals more. The surety bond guarantees that the broker will "fully and faithfully comply with the requirements of Chapter 6, Part 2, Division 1 of the California Insurance Code and all other applicable provisions of the California Insurance Code". Among the guarantees of the obligation is a requirement that the surplus lines broker properly account for the taxes due on gross premiums and in the case of annual premiums of $20,000 or more, enter in to a monthly installment agreement with the state. The California surplus lines broker bond therefore acts as a fiduciary bond, i.e., financial guarantee. Further, there are criminal and civil penalties associated with violation of specific provisions of the Code. California surety bond leader, Surety One, Inc. is a specialist in the bonding needs of insurance professionals. We offer both surety and fidelity bonds needed by producers, independent brokers, surplus lines brokers and claims professionals in all fifty states, Puerto Rico and the U.S. Virgin Islands. Questions about this surety bond? Call us at (800) 373-2804, email us at Underwriting@SuretyOne.com or click here for live chat. A California surplus lines broker bond is quick, easy and issued same-day.
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