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Army Veteran Owned | Expert Surety Bonds Since 2004
Have a question? +1 815-826-6324 (815-8-BondAI) phil@AmericasSuretyBonds.com
Army Veteran Owned | Expert Surety Bonds Since 2004
The $50,000 bond is only half of what Tennessee asks for. Before a public adjuster license issues, the state also wants a $500,000 per occurrence errors and omissions policy, and the license shuts off on its own if either one lapses. Getting the bond in place on the commissioner's approved form is the quick part, and it keeps your authority to sign contracts with Tennessee policyholders intact for the full two year license term.
Tennessee Code Annotated 56-6-911 requires every public adjuster applicant to post a surety bond of at least $50,000 in favor of the State of Tennessee before the license is issued and to keep it in force for as long as the license is held. The bond must be written by an insurer authorized to issue surety bonds in Tennessee, be on a form approved by the commissioner, and cannot be cancelled without 30 days' prior written notice. Nonresident adjusters must provide the same proof of financial responsibility.
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Applicants often line up the bond and assume they are finished. Tenn. Code Ann. 56-6-911 calls for evidence of financial responsibility through a surety bond and an errors and omissions insurance policy, or other security satisfactory to the department. The bond is a minimum of $50,000. The E&O policy is a minimum of $500,000 per occurrence and must come from an admitted insurer authorized to write E&O in Tennessee.
The requirement falls on the applicant for a public adjuster license under the Tennessee Public Adjuster Licensing Act of 2006, which licenses both individuals and business entities. Nonresidents are not excused. Section 56-6-908 lists proof of financial responsibility under 56-6-911 as a condition of the nonresident license, along with a resident public adjuster license in good standing in the home state. Being exempt from the licensing exam under 56-6-907 has nothing to do with the bond.
The bond runs in favor of the state and specifically authorizes the commissioner to recover on behalf of any person in Tennessee who sustained damages from the adjuster's erroneous acts, failure to act, conviction of fraud, or conviction of unfair practices while working as a public adjuster. The surety pays a valid claim and then looks to the adjuster for repayment.
Fee disputes are a common source of complaints. Section 56-6-913 caps the fee at 15% of the settlement when the contract is signed before the carrier makes an offer, and at 25% of the increase when it is signed after an offer. No fee, retainer or deposit may be taken before the claim settles. The percentage caps do not apply to commercial insurance.
The license lasts two years under 56-6-909. The bond has to stay in place the whole time. If it is terminated or becomes substantially impaired, authority to act as a public adjuster ends automatically. The adjuster must promptly notify the commissioner when a bond terminates, and the commissioner can ask to see proof of financial responsibility at any time.
The premium is set by the surety after reviewing the applicant's credit, experience and claims history. It is paid annually and is not the $50,000 face amount.
No. Tenn. Code Ann. 56-6-911 also requires an errors and omissions policy of at least $500,000 per occurrence from an admitted insurer, unless the department accepts other security it finds satisfactory.
Yes. Under 56-6-908 a nonresident license requires proof of financial responsibility as set out in 56-6-911, along with a resident public adjuster license in good standing in your home state.
The surety must give 30 days' prior written notice to the commissioner and to you. If the bond terminates or becomes substantially impaired, your authority to act as a public adjuster in Tennessee ends automatically until new security is in place.
The commissioner can recover on behalf of any person in Tennessee who suffered damages from the adjuster's erroneous acts, failure to act, conviction of fraud, or conviction of unfair practices as a public adjuster.
The bond does not set fees, but 56-6-913 does. Outside commercial insurance, the fee is capped at 15% of the settlement if you are hired before the carrier's first offer, or 25% of the increase if hired after. You cannot collect anything before the claim settles.
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