Home or Service Warranty Association ($75,000) Bond - Statewide in Florida

Brief Summary

A Florida home warranty association has two ways to meet its deposit requirement before the Office of Insurance Regulation will issue a license: put up $100,000 in securities, or put up $25,000 in securities and file a $75,000 surety bond. The bond route leaves $75,000 in the business instead of on deposit with the Department of Financial Services.

Under section 634.305, Florida Statutes, every home warranty association must, before the Office of Insurance Regulation issues its license, either deposit securities worth at least $100,000 with the Department of Financial Services or deposit at least $25,000 in securities and file a $75,000 surety bond with the Office. Service warranty associations under section 634.405 may also file a surety bond in place of their securities deposit, and $75,000 is the deposit tier for a warrantor with more than $300,000 but less than $750,000 of gross written premiums in Florida.

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How to Apply for a Home or Service Warranty Association ($75,000) Bond:

• Decide whether you are licensing as a home warranty association under Part II or a service warranty association under Part III of chapter 634.
• Home warranty: choose between a $100,000 securities deposit or a $25,000 securities deposit plus the $75,000 bond.
• Service warranty: find your deposit tier from gross written premiums in Florida.
• Deposit securities eligible under s. 625.52 with the Department of Financial Services as required.
• Obtain the bond from an authorized surety insurer and file it with the Office of Insurance Regulation.
• Keep the bond in force, and replace it within 30 days of any termination notice.

Detailed Information About the Florida Home or Service Warranty Association ($75,000) Bond:

Home warranty associations

Section 634.305 requires every home warranty association to post security before the Office of Insurance Regulation issues its license. The first option is a deposit with the Department of Financial Services of securities eligible under s. 625.52 with a market value of at least $100,000 at all times. The second option is a smaller securities deposit of at least $25,000 plus a $75,000 surety bond filed with the Office and issued by an authorized surety insurer.

The bond guarantees that the association will faithfully and truly perform all the conditions of any home warranty contract, and it is subject to the Office's approval. It cannot be canceled unless at least 60 days' advance notice in writing is filed with the Office. Once notice of termination is filed, the association has 30 days to give the Office a replacement bond. If it does not, the Office suspends the license until the deposit requirement is met.

Service warranty associations

Section 634.405 sets the deposit for a service warranty warrantor by its gross written premiums in Florida.

• $300,000 or less: $50,000
• More than $300,000 but less than $750,000: $75,000
• $750,000 or more: $100,000

In lieu of the securities deposit, the association may file a surety bond issued by an authorized surety insurer. That bond guarantees the association will faithfully and truly perform all the conditions of any service warranty contract. The same 60 day cancellation notice applies, and within 30 days of a termination notice the association must provide a replacement bond or deposit additional securities. A warranty seller is handled separately and places at least $100,000 in trust with the Department before licensing.

Reserves are a separate test

Sections 634.3077 and 634.406 set their own financial requirements for these associations, covering unearned premium reserves, contractual liability insurance and net assets. Review them alongside the deposit or bond.

Eligibility and Requirements for a Florida Home or Service Warranty Association ($75,000) Bond:

• Surety bond of $75,000 issued by an authorized surety insurer.
• Bond filed with and subject to approval of the Florida Office of Insurance Regulation.
• Bond conditioned on faithful performance of all warranty contract conditions.
• No cancellation without at least 60 days' advance written notice filed with the Office.
• For home warranty associations, a companion securities deposit of at least $25,000 with the Department of Financial Services.

Florida Home or Service Warranty Association ($75,000) Bond FAQs:

Official and Additional Resources for the Florida Home or Service Warranty Association ($75,000) Bond: