Why would a surety bond be revoked by an agency?
Agency revocations can occur in a variety of ways. If the agency moves its activities to a different location or alters the bond’s criteria, the surety bond may need to be canceled. An agency can also ask a surety firm to withdraw a bond based on false information provided by an insurance applicant. Before revocation procedures may begin, an agency will frequently issue a show-cause order.
This document explains why they’re thinking of withdrawing your bond and gives you the chance to respond with any arguments for why it shouldn’t be. You normally have 15 days from the date you receive this notification to file a response, after which hearings will be held, decisions will be made, and revocation may be issued.
If a surety bond is revoked, the insurance company is required to notify the agency and its insureds. If the insured files an appeal, the bond’s status will most likely be delayed until a decision is made on whether or not it should be kept on the court’s record. Unless a judge orders otherwise, service must be made within 15 days of an order canceling a surety bond if no appeal is filed.
Is it possible to have a surety bond revoked?
A surety bond can, in fact, be withdrawn. An agency can request the revocation of a surety bond in one of two ways:
(1) The insurance company’s endorsement on the bond has been requested to be removed; or
(2) Premium prices have risen above those set forth by an agency at the outset.
The decision to cancel a surety bond will be made only after a hearing and a final conclusion have been reached. It’s critical that you file any papers required to appeal this order as soon as possible so that you have enough time to react correctly.
What can lead to the revocation of your surety bond?
An agency may request that a surety bond be canceled for a variety of reasons:
– If your insurance company lowers its coverage and your bond merely pays the difference;
– If your bond is registered with the original insurer and the insurer is bought out by another company; or
– If an insured’s number of locations has increased or decreased.
If you have filed for bankruptcy, your insurer may request that your surety bond be revoked until you have addressed your debts. Whether you file for Chapter 7 or Chapter 13 bankruptcy, this can happen. However, if you’ve recently gotten a foreclosure notice on one of the locations covered by this policy, the insurance company is unlikely to cancel it right away.
When a surety bond is exonerated, what does that mean?
If your surety bond is canceled, the agency will usually issue you an order to show cause, giving you time to file any objection letters. Hearings will be held after that, and an administrative judge will make a ruling. If the insured files an appeal, the bond’s status will most likely be delayed until a decision is made on whether or not it should be kept on the court’s record. Unless a judge orders otherwise, service must be made within 15 days of an order canceling a surety bond if no appeal is filed.
How do you keep your surety bond from being revoked?
You may simply prevent having your surety bond canceled by keeping them up to date on the condition of your company, delivering any needed information promptly, and ensuring that all fees are reasonable.
What is the procedure for revocation of a surety bond?
Your business’s bond can be revoked in the same manner that a surety bond can be canceled. The insurance firm must tell each agency for which it has insured bonds and advise them as well if you decide to issue a notice of dissolution, change your corporate address, remove an endorsement, or terminate coverage.
When a surety bond is “canceled” but not “revoked,” what does that mean?
If a surety bond is canceled but not revoked, it signifies that one or more insurers have decided to cease their relationship with a specific agency, but the policy will continue to be in effect until all remaining coverages expire or are terminated by an insured site.
An insurer may cancel a policy without warning in some instances. Typically, this occurs as a result of the insurance company failing to pay its premiums on time, causing the agent’s bond to be revoked. If you want to keep your business’s bonds from being canceled or revoked, ensure sure all payments are made on schedule and that your agency gives you written notice if its agents fail to follow these requirements.
Whether or not an agency’s bond can be revoked is determined by whether or not needed information (such as financial statements) was not provided, whether or not premium rates were inappropriate (i.e., beyond the legal limit), and whether or not correct dissolution procedures were followed.
