Title Agency Bond Insurance In Florida

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In Florida, title agencies are highly regulated due to their role in real estate transactions and handling large sums of money. To obtain and maintain a license, a title agency must meet specific insurance and bond requirements mandated by both state law and their underwriting title insurance companies.

Here’s a breakdown of the key bonds and insurance policies a Florida title agency needs:

1. Title Agent Surety Bond

• Requirement: Florida Statute 626.8419 requires every licensed title insurance agency to have a surety bond. The bond amount is typically $35,000.
• Purpose: This bond protects the title insurance company that appoints the agency. If the title agency violates the contract with the insurer or engages in misconduct that causes financial loss, the insurer can make a claim against the bond to recoup their losses.
• How it works: This is not insurance for the agency itself. A surety bond is a three-party agreement:
• Principal: The title agency.

• Obligee: The Florida Department of Financial Services (DFS) and/or the title insurer.

• Surety: The company that issues the bond. If a claim is paid out by the surety, the title agency is legally obligated to reimburse the surety company for the full amount.

2. Errors and Omissions (E&O) Insurance

• Requirement: Florida law mandates that a title insurance agency must carry E&O insurance in an amount acceptable to the insurer that appoints them. The minimum coverage is $250,000 per claim with an aggregate limit and a deductible of no more than $10,000.
• Purpose: This is a crucial professional liability insurance policy. It protects the title agency from lawsuits and claims of negligence, errors, or omissions in the professional services they provide. This is the insurance that protects your business from lawsuits.
• What it covers:
  • Errors in a title search or abstract that miss a lien or defect.
  • Mistakes in preparing or issuing a title insurance policy.
  • Oversights during the closing or escrow process.
  • Breach of fiduciary duty claims.
• Why it’s essential: A single mistake in a real estate transaction can lead to a lawsuit for hundreds of thousands of dollars. E&O insurance covers legal defense costs, settlements, and judgments, even if the claim is meritless.

3. Fidelity Bond

• Requirement: Florida law also requires a title insurance agency to have a fidelity bond with a minimum coverage of $50,000.
• Purpose: A fidelity bond is a type of insurance that protects the title agency and its clients from financial losses caused by dishonest acts of the agency’s employees.
• What it covers:
  • Theft or embezzlement of escrow funds by an employee.
  • Forgery or other fraudulent acts by an employee.
  • Misappropriation of funds.
• Why it’s essential: Title agencies handle large sums of money in escrow accounts. The risk of an employee stealing or misusing these funds is a major concern. A fidelity bond provides financial protection against this type of internal fraud.

Summary of Requirements

How to Get the Right Insurance and Bond

Because of the specific and intertwined nature of these requirements, it is highly recommended that you work with an insurance agent or broker who specializes in the title and real estate industry in Florida. They can help you:

• Bundle the necessary policies and bonds to ensure compliance with all state laws and the requirements of your appointing title insurance companies.
• Find competitive rates by working with specialized carriers.
• Provide guidance on the application process for your title agency license and explain how to properly file proof of your bonds and insurance.

We Insure all counties Escambia, Santa Rosa, Okaloosa, Walton, Bay, Gulf, Franklin, Wakulla, Jefferson, Taylor, Dixie, Levy, Citrus, Hernando, Pasco, Pinellas, Hillsborough, Manatee, Sarasota, Charlotte, Lee, Collier, Monroe, Miami-Dade, Broward, Palm Beach, Martin, St. Lucie, Indian River, Brevard, Volusia, Flagler, St. Johns, Duval, and Nassau.