Surety Bond Encyclopedia

Title Insurance Agent (Director Operation) Bond - Statewide in Texas

Brief Summary

The Texas title insurance agent and direct operation bond is not a flat $10,000. It is the greater of $10,000 or 10 percent of the gross premium written in your latest statistical report to TDI, capped at $100,000. Sizing it correctly up front keeps a license application from stalling at the Texas Department of Insurance.

Every licensed title insurance agent and direct operation in Texas must file a surety bond payable to the Texas Department of Insurance under Insurance Code 2651.101. The amount is the greater of $10,000 or 10 percent of the gross premium written according to the latest statistical report to TDI, but not more than $100,000. A direct operation is a title insurance company that owns or leases and operates an abstract plant in a Texas county under a license issued by TDI for that county.

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How to Apply for a Title Insurance Agent (Director Operation) Bond:

Pull the gross premium written from the latest statistical report filed with TDI.
Calculate the bond amount as the greater of $10,000 or 10 percent of that figure, capped at $100,000.
Use the legal name of the agent or direct operation exactly as it appears on the TDI license application.
Complete the bond application and review the quoted premium.
Receive the executed bond on TDI form FINT122.
Submit a copy of the bond with the license application on form FINT143.

Detailed Information About the Texas Title Insurance Agent (Director Operation) Bond:

The amount moves with your premium volume

Insurance Code 2651.101(b) sets the bond at the greater of $10,000 or an amount equal to 10 percent of the gross premium written by the title insurance agent or direct operation, based on the latest statistical report to TDI. The bond never has to exceed $100,000. A new or small operation sits at the $10,000 floor. Once gross premium written reaches $1,000,000, the bond is at the $100,000 cap.

What a direct operation is

The operation named on this page is what Chapter 2651 calls a direct operation. Under Section 2651.051, a title insurance company may not own or lease and operate an abstract plant, or take part in a bona fide joint abstract plant operation, in a Texas county unless TDI has issued it a direct operation license for that county. Section 2651.101 applies the same bond requirement to direct operations and to licensed title insurance agents, and Section 2651.001 bars anyone from acting as a title insurance agent without the license and the bond or deposit.

What the bond covers

The bond obligates the principal and surety to pay pecuniary loss sustained by any participant in an insured real property transaction through fraud, dishonesty, theft, embezzlement or wilful misapplication by the agent or direct operation. It also covers administrative expense TDI incurs in a receivership of the agent or direct operation. It must be issued by a corporate surety company authorized to write surety bonds in Texas.

Form and term

TDI publishes the bond as form FINT122, Texas Title Insurance Agent/Direct Operation Bond, with TDI as obligee. The form states that the bond stays in force indefinitely and that a continuation or renewal certificate is unnecessary. The surety can cancel with 30 days written notice to TDI. The license application, form FINT143, asks for a copy of the surety bond, letter of credit or cash deposit as proof of coverage.

Unless TDI adopts staggered renewal, an agent license expires on June 1 after the second anniversary of issuance under Section 2651.006, and a direct operation license expires on the second June 1 after issuance under Section 2651.054.

Other security title licensees often miss

This bond is separate from the Escrow Officers Schedule Bond that an agent or direct operation must carry for its escrow officers under Section 2652.101. Title insurance agents also have to meet the minimum capitalization standards in Section 2651.012. Instead of this bond, Section 2651.102 allows a deposit with TDI of cash, irrevocable letters of credit issued by a federally insured financial institution in Texas, or securities approved by TDI.

Eligibility and Requirements for a Texas Title Insurance Agent (Director Operation) Bond:

Corporate surety company authorized to write surety bonds in Texas.
Texas Department of Insurance named as obligee on form FINT122.
Bond amount between $10,000 and $100,000 under Insurance Code 2651.101(b).
Continuous bond with no renewal certificate needed, cancelable by the surety on 30 days written notice to TDI.
A separate Escrow Officers Schedule Bond or deposit for any appointed escrow officers.

Texas Title Insurance Agent (Director Operation) Bond FAQs:

Is the bond always $10,000?

No. $10,000 is the floor. Section 2651.101(b) requires the greater of $10,000 or 10 percent of the gross premium written according to your latest statistical report to TDI, up to $100,000.

What is a direct operation?

A title insurance company that owns or leases and operates an abstract plant, or takes part in a bona fide joint abstract plant operation, in a Texas county. Section 2651.051 requires a direct operation license from TDI for each such county.

Who can make a claim on the bond?

Any participant in an insured real property transaction who suffers pecuniary loss through fraud, dishonesty, theft, embezzlement or wilful misapplication by the agent or direct operation. TDI can also recover administrative expense incurred in a receivership.

Do we renew the bond with each license renewal?

Form FINT122 states that the bond remains in force indefinitely and that a continuation or renewal certificate is unnecessary. Because the amount is tied to your latest statistical report, check it against each new report.

Does this bond cover our escrow officers?

No. Escrow officers are covered by a separate bond or deposit under Section 2652.101, written on TDI form FINT123.

Can we deposit cash instead?

Yes. Section 2651.102 allows a deposit with TDI of cash, irrevocable letters of credit issued by a federally insured financial institution in Texas, or securities approved by TDI, subject to the same conditions as the bond.