Surety Bond Encyclopedia

Insurance Broker ($10,000) MAIL Bond - Statewide in California

Brief Summary

Your California property, casualty or personal lines license lets you act as an agent, but you cannot act as a broker until a $10,000 Bond of Insurance Broker is on file with the Department of Insurance. We issue it on the CDI form so you can mail it to the Producer Licensing Bureau and start placing business on behalf of clients.

California Insurance Code 1662 requires property, casualty and personal lines broker-agents to file a bond with the Insurance Commissioner before acting as an insurance broker and to keep it in force. The bond is $10,000, is written by an admitted surety in favor of the people of the State of California, and guarantees that the broker accounts for premiums and money collected on insurance other than life.

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How to Apply for a Insurance Broker ($10,000) MAIL Bond:

Your California license number and the name exactly as licensed by the CDI.
Confirm which lines you are licensed for: property, casualty or personal lines.
Owner or principal details for the surety's underwriting review.
Bond executed on the CDI Bond of Insurance Broker form LIC 417-5 for $10,000.
Mail the original bond to the CDI Producer Licensing Bureau at the address on the form.
Include the statutory replacement bond fee if the bond is not filed with an original license application.

Detailed Information About the California Insurance Broker ($10,000) MAIL Bond:

The bond is for broker authority, not the license

A California license and broker authority are two different things. Insurance Code 1662 says a property broker-agent, a casualty broker-agent and a personal lines broker-agent must file this bond with the commissioner before acting in the capacity of an insurance broker. Acting as an agent for an insurer works differently. The CDI says agent authority comes from an insurer appointment filed electronically through NIPR. Broker authority comes from the $10,000 Bond of Insurance Broker, form LIC 417-5.

One bond, even with both lines

Insurance Code 1665 sets the bond at $10,000 for property and casualty broker-agents and says individuals and organizations licensed for both property and casualty only need one $10,000 bond. The CDI personal lines requirements page also calls for the $10,000 Bond of Insurance Broker before a personal lines licensee acts as a broker.

What the bond guarantees

This is not errors and omissions coverage. Under Section 1665 the bond is contingent on the broker accounting to any person requesting insurance for money or premiums the broker collects when acting as a broker for insurance other than life. Section 1663 requires the bond to be executed by an admitted surety insurer, continuous in form and in favor of the people of the State of California.

Filing by mail

The CDI form directs the completed bond to the Producer Licensing Bureau at the mailing address printed on the form, and points to California Code of Regulations, title 11, section 50.20 for how the bond must be executed. The form also says a statutory replacement bond fee must be submitted unless the bond is filed with an original application.

Keep it in force

Section 1662 says broker authority terminates automatically the moment no bond is in force. The surety can cancel by giving the commissioner 30 days notice, so watch for any cancellation notice and have a replacement bond filed before the date it takes effect.

Eligibility and Requirements for a California Insurance Broker ($10,000) MAIL Bond:

Admitted surety insurer, as required by Insurance Code 1663.
Bond continuous in form and in favor of the people of the State of California.
Bond amount of $10,000, with one bond covering both property and casualty.
Bond on file before you act as a broker.
Bond kept in force continuously, since broker authority ends automatically without it.

California Insurance Broker ($10,000) MAIL Bond FAQs:

I am licensed for property and casualty. Do I need two bonds?

No. Insurance Code 1665 says individuals and organizations licensed for both property and casualty are only required to obtain one $10,000 bond to act as a broker.

Do I need this bond if I only write business through insurer appointments?

The bond is required before you act in the capacity of an insurance broker. The CDI treats agent authority, which comes from an insurer appointment, separately from broker authority, which comes from the $10,000 broker bond.

Is this the same as errors and omissions insurance?

No. The bond guarantees that you account for money and premiums collected from people requesting insurance other than life. It does not cover your own professional liability.

How is the bond filed?

On the CDI Bond of Insurance Broker form, mailed to the Producer Licensing Bureau at the address printed on the form. If the bond is not filed with an original application, the form says a statutory replacement bond fee must be included.

What happens if my bond is cancelled?

The surety must give the commissioner 30 days notice. Under Insurance Code 1662, your authority to act as a broker ends automatically as soon as no bond is in force.