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What is a collection agency?
Collection agencies collect debts and regularly manage sensitive data, such as a consumer’s personal information and financial details. Since a collection agency is regarded as a high-risk company, surety bonds for collection agencies are a necessity. The collection agency bond ensures the credibility and dependability of the agency being bonded.
How can collection agency bonds regulate the industry?
The majority of states require collection agencies to obtain a collection agency bond before they can receive their business license. The purpose of a collection agency bond is to ensure professionals are performing their job according to industry regulations. Collection agencies are expected to properly handle the money they receive when pursuing outstanding debts, as well as ensuring these funds are being routed to the company with the debt outstanding.
Each collection agency surety bond issued is a legal contract binding three parties together.
- The principal is the collection agent/agency who purchases the bond.
- The obligee is the government agency who requires the bond.
- The surety is the insurance company who issues the bond.
If a collection agency happens to misappropriate funds, the obligee can seek reimbursement by filing a claim against the agency’s bond. A valid claim means the surety must pay reparation up to the full amount of the bond. The surety will then require reimbursement from the collection agency.
State specific costs
The bond amounts and regulations for each license are established on the state level. Therefore, costs and requirements for collection agency bonds fluctuate from state to state. For example, before collection agencies in New Jersey can legally conduct business, they must post a $5,000 surety bond for $100. These terms are not identical across all states, so select your state below for pricing information in your area or call 1 (800) 308-4358 to speak with a surety expert.
How much will a collection agency bond cost?
Collection agency bonds are relatively inexpensive to purchase for qualified applicants. If you are looking for $10,000 or less in surety insurance coverage, your premium will be $100. This is the lowest possible premium available with 85 percent of states requiring the bonds at this value. On the other hand, if your state requires coverage greater than $10,000 for collection agencies, your premium will be moderately higher depending on the amount of coverage needed.
How do you apply for a collection agency bond?
If you need a collection agency bond, contact SuretyBonds.com online or call 1 (800) 308-4358. The specialists at SuretyBonds.com will shop your collection agency bond around with our premier underwriters to ensure the most competitive bonding rates available - no matter your credit score. Once you have paid your premium, your bond will be executed immediately and mailed. If you need the original form of the bond by the next business day, simply choose our overnight shipping option.