What is a California Surplus Line Broker Bond?
Surplus Line Brokers in California must furnish and maintain a surety bond as part of the insurance licensing process. The bond amount is typically $50,000 and the requirement applies to all resident and non-resident surplus line broker business entities. Individual licensees are exempt from the bond requirement if they are only transacting business on behalf of a licensed surplus line broker. Because surplus lines are less regulated activities and policies are not protected by state guarantee funds, the bond requirement affords consumers additional protection in the event of a violation.
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Why is a California Surplus Line Broker Bond Required?
The bond ensures that the surplus line broker fully and faithfully complies with the requirements of Chapter 6, Part 2, Division 1 of the Insurance Code of California and all other applicable provisions of the Code. This bond remains in effect until the surety company is released from further liability by the state commissioner or until the bond is canceled by the surety. In order to initiate cancelation, the surety must provide 30 days' written notice to the state commissioner.
Surplus Line Broker Bonds And Getting Your California Business License/Registration
Following is an overview of key surplus line broker license filing requirements for residents and non-residents.
- Submit the Application for Business Entity license form LIC 441-11.
- Furnish a Bond of Surplus Line Broker, form LIC 447-31, in the penal sum of $50,000 accompanied by a jurat and power of attorney for attorney in-fact executing bond; completed in the name of the applicant and signed by the applicant.
- "Natural Persons Named On Business Entity" must also apply for individual licenses through the Department's online portal.
- Pay applicable license fees as required by the Department
Licenses issued to a new California surplus line broker licensee are effective on the date the license is issued and expire the last day of that same month two years later. Additional licenses issued at a later date will expire on the same date as the initial license.
Additional California Surplus Line Broker Bond Resources & Links
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