Surety Bonds Insurance Agents

Insurance Broker Bonds: What They Are and Which States Require Them

By Staff Writer on October 30, 2025

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Learn what Insurance Broker Bonds are, which states require them, and how they protect consumers and regulators from unethical or non-compliant broker behavior. This guide explains how these surety bonds differ from E&O insurance, outlines current state requirements and costs, and clarifies why some brokers must be bonded.

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Insurance Broker Bonds: What They Are and Which States Require Them

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What is an Insurance Broker Bond?

It’s a surety bond that guarantees insurance brokers comply with state laws and handle client funds ethically, protecting clients and regulators from financial loss.

How is it different from Errors & Omissions (E&O) Insurance?

E&O insurance protects the broker, while an Insurance Broker Bond protects the broker’s clients and the public.

Who needs an Insurance Broker Bond?

Independent brokers or surplus lines agents in certain states, such as California, Florida, Georgia, Maryland, Virginia, and more.

How much does an Insurance Broker Bond cost?

Premiums usually range from 1 % to 5 % of the bond amount—around $100 to $500 for a $10,000 bond.

Which states require insurance broker bonds?

States like California, Georgia, Florida, Maryland, and Virginia require insurance broker bonds for certain licensed brokers.

What happens if you operate without a required bond?

You risk license suspension, fines, and loss of client trust or business opportunities.

How can BOSS Bonds help with insurance broker bonds?

BOSS Bonds offers fast, secure online applications and expert support to help brokers meet bonding requirements quickly.

Insurance Broker Bonds: What They Are and Which States Require Them

Insurance broker bonds, also known as insurance agent bonds or producer bonds, play a critical role in maintaining trust within the insurance industry. These surety bonds guarantee that brokers comply with state laws, handle client funds responsibly, and uphold their ethical standards.

In this article, we break down what insurance broker bonds are and how they protect clients and regulators from financial loss. We also explore which states require these bonds, how much they cost, and why understanding them matters, even if you operate in a state without specific insurance broker bond requirements.

What Is an Insurance Broker Bond?

An insurance broker bond is a type of surety bond that some states require licensed insurance brokers and producers to purchase. Like all surety bonds, insurance broker bonds create a legal agreement between these three parties:

Principal – The licensed insurance broker who is required to obtain the bond.
Obligee – The state insurance department requiring the bond.
Surety – The company that provides the bond and guarantees the broker’s compliance.

If a broker mishandles client funds, commits fraud, or violates their licensing laws, their clients or the regulatory agency can file a claim against their bond. After that, the surety company will verify their claim, compensate the affected parties, and seek reimbursement from the broker.

Insurance Broker Bond vs. Errors and Omissions (E&O) Insurance: What’s the Difference?

Surety bonds and insurance sound similar, but they’re not the same thing. Most notably, they protect different parties. E&O insurance protects the broker who purchases the policy. In contrast, insurance broker bonds protect their clients, regulators, and the public.

Who Needs an Insurance Broker Bond?

Not all insurance professionals need insurance broker bonds. They’re typically only required of independent brokers or surplus lines agents who collect and remit premiums on behalf of carriers or operate in certain states.

In contrast, captive agents who work exclusively for a single insurer are typically exempt because their employer assumes the financial responsibility for their transactions.

Property & Casualty insurance agents only need this bond in states that specifically require it for licensed producers or brokers, such as California, Georgia, Florida, Maryland, Virginia, and more. Independent agents that want to expand their business across state lines or enter surplus lines markets should confirm their bonding requirements early on to prevent compliance delays.

Which States Require Insurance Broker Bonds?

As of 2025, these are the states that currently require insurance agent and surplus lines broker bonds:

State	Bond Type	Typical Amount	Applies To
California	Insurance Broker Bond	$10,000	Licensed brokers handling client funds
Kentucky	Insurance Agent Bond	$20,000	Licensed insurance agents
Alabama	Surplus Lines Broker Bond	$50,000	Surplus lines brokers
Florida	Surplus Lines Agent Bond	$35,000	Surplus lines brokers
Georgia	Surplus Lines Broker Bond	$50,000	Surplus lines brokers
Maryland	Surplus Lines Broker Bond	$10,000	Surplus lines brokers
Ohio	Surplus Lines Broker Bond	$25,000	Surplus lines brokers
Oklahoma	Surplus Lines Broker Bond	$5,000 - $40,000	Surplus lines brokers
Pennsylvania	Surplus Lines Broker Bond	$50,000	Surplus lines brokers
South Dakota	Surplus Lines Broker Bond	$2,000	Surplus lines brokers
Virginia	Surplus Lines Broker Bond	$25,000	Surplus lines brokers

Note: This list does not include all insurance industry-related surety bond requirements by state (e.g., special surplus lines, resident/nonresident agents, and title insurance agents). Consult with your state's DOI for specific bonding requirements for your license.

Insurance broker bonding regulations are subject to change, and more states may add similar requirements in the coming years. Thus, you should always verify your state’s latest rules with its Department of Insurance (DOI).

Pro tip: If you’re licensed in multiple states or plan to expand your agency’s footprint in the future, partner with a surety expert like BOSS Bonds. Our team can help you stay ahead of changing compliance requirements and secure your required bonds quickly when needed.

How Much Does an Insurance Broker Bond Cost?

Surety bond costs depend on several factors, including your state, credit score, and required bond amount. Annual premiums typically range from 1% to 5% of the total bond amount. Thus, a $10,000 insurance broker bond may cost anywhere from $100 to $500.

You’ll be more likely to qualify for a lower bond premium if you have a:

Strong credit history
Extensive work experience
Clean claims history
Lower required bond amount

The easiest way to find out your bond costs is to fill out an application. You can often receive a quote for your insurance broker bond the same day you apply. For example, at BOSS Bonds, we provide instant quotes for our insurance broker bonds.

Why Do Some States Require Broker Bonds?

States that require insurance broker bonds use them to protect consumers and maintain trust in the insurance industry. That’s because these bonds provide:

Ethical accountability – By holding brokers financially liable for fraud or premium mismanagement, insurance broker bonds help protect clients.
Regulatory compliance – These bonds also help ensure brokers follow all licensing laws and fiduciary responsibilities.
Industry integrity – By incentivizing ethical conduct, insurance broker bonds bolster trust in the insurance industry.
Financial compensation – In the rare case that an insurance broker violates their ethical or regulatory responsibilities, their bond provides a reliable financial remedy for affected parties.

Put simply, insurance broker bonds strengthen the public's confidence in the profession. At BOSS Bonds, we know that ethical, compliant agents are the backbone of a trustworthy industry. That’s why we make our bonding process quick and easy. Our goal is to streamline the paperwork so you can get back to focusing on serving your clients.

What Happens If You Don’t Have a Required Bond?

If you fail to secure your insurance broker bond while operating in a state that requires one, you can face serious consequences, including:

License suspension or revocation – Your state’s DOI can suspend or revoke your license until you file your bond.
Fines or penalties – Failing to obtain or renew your bond on time can result in regulatory fines for non-compliance.
Loss of client trust – Operating without a bond can erode clients’ confidence in your agency.
Lost business opportunities – Many insurance carriers and clients may refuse to work with unbonded brokers or those with past compliance infractions.

As you can see, satisfying your bond requirements is about more than regulatory compliance. It’s also a reflection of your professionalism and credibility as a licensed insurance broker.

How to Get an Insurance Broker Bond

Whether you need a bond to satisfy state requirements or simply want to set your business apart, the process is simple, straightforward, and requires minimal paperwork. All you need to do is follow these four steps:

Check your state’s requirements – Visit your DOI’s website or contact BOSS Bonds to determine the exact bond type and amount you should apply for.
Apply online – During the application, you’ll need to provide your business name, license details, and credit information.
Get your quote – Many insurance broker bonds are underwritten and approved within minutes.
Make your payment – Submit your bond premium payment to finalize the transaction.
File your bond – Once your bond is issued, you must file with your DOI electronically or by mail.

If you’re ready to secure your insurance broker bond, BOSS Bonds can help you get yours fast—often the same day you apply. Simply apply online or contact our team if you have questions!

Sources:

State of California Department of Insurance. Bond of Insurance Broker (California Insurance Code sections 1662-1665).

https://www.insurance.ca.gov/0200-industry/0050-renew-license/0200-requirements/upload/LIC4175BondInsBroker.pdf

Kentucky Department of Insurance. Agent Licensing Frequently Asked Questions.

https://insurance.ky.gov/ppc/Documents/agentlicfaq060910.pdf

Justia. 2005 Florida Code.

https://law.justia.com/codes/florida/2005/TitleXXXVII/ch0626.html

Maryland Insurance Administration. Surplus Lines Broker Certificate of Qualification.

https://insurance.maryland.gov/Producer/pages/surpluslinesbrokers.aspx

Virginia State Corporation Commission. Surplus Lines Brokers.

https://www.scc.virginia.gov/regulated-industries/bureau-of-insurance/licensed-agent/surplus-lines-brokers/

Key Points:

What is an insurance broker bond, and why is it important?

An insurance broker bond is a type of surety bond that guarantees brokers comply with state laws, handle client funds ethically, and avoid fraudulent practices.
It protects clients and regulators from financial harm caused by unethical or illegal broker actions.
These bonds are required in certain states as part of the licensing process for brokers.

Who is required to obtain an insurance broker bond?

Independent brokers or surplus lines agents in states like California, Florida, Georgia, Maryland, Virginia, and more.
Captive agents working exclusively for one insurer are typically exempt.
Brokers expanding into surplus lines markets or across state lines should confirm bonding requirements early.

What is an insurance broker bond, and why is it important?

Costs depend on:

State requirements (bond amounts range from $10,000 to $35,000).
Credit score and financial history.
Bond amount (premiums are typically 1%-5% of the bond amount).

Example: A $10,000 bond may cost $100-$500 annually.

Which states currently require insurance broker bonds?

California: $10,000 bond for licensed brokers handling client funds.
Kentucky: $20,000 bond for licensed agents.
Alabama: $50,000 bond for surplus lines brokers.
Florida: $35,000 bond for surplus lines brokers.
Georgia: $50,000 bond for surplus lines brokers.
Maryland: $10,000 bond for surplus lines brokers.
Ohio: $25,000 bond for surplus lines brokers.
Oklahoma: $5,000 - $40,000 bond for surplus lines brokers.
Pennsylvania: $50,000 bond for surplus lines brokers.
South Dakota: $2,000 bond for surplus lines brokers.
Virginia: $25,000 bond for surplus lines brokers.

Pro Tip: Regulations may change, so always verify with your state’s Department of Insurance (DOI).

What are the consequences of not having a required bond?

License suspension or revocation: Your state’s DOI may suspend or revoke your license.
Fines or penalties: Non-compliance can result in regulatory fines.
Loss of client trust: Operating without a bond can damage your reputation.
Missed business opportunities: Many clients and carriers won’t work with unbonded brokers.