How is an Adjuster bond classified?

An adjuster bond is classified as a surety bond, which serves to ensure that the adjuster will act ethically and in accordance with the law while fulfilling their duties. Surety bonds involve three parties: the obligee (the entity requiring the bond), the principal (the adjuster), and the surety (the company that issues the bond). If the adjuster fails to meet the obligations implied by the bond, the surety company is responsible for compensating the obligee. Ultimately, the adjuster is then required to repay the surety for any claims paid out.

This classification as a surety bond is distinct from other types of bonds or insurance. Fidelity insurance, for instance, covers losses due to fraudulent acts by the insured, while a property bond pertains specifically to real or personal property. Casualty insurance, on the other hand, generally protects against loss or liability arising from accidents or injuries. Understanding the specifics of surety bonds helps clarify their purpose within the realm of insurance and regulatory requirements for adjusters.