Iowa Delayed Deposit Services Bond: A Comprehensive Guide
April 27, 2021
This guide provides information for insurance agents to help delayed deposit services businesses obtain Iowa Delayed Deposit Services Bonds
At a Glance:
- Average Cost: Between $375 to $1,875 per year based on the applicant’s credit
- Bond Amount: $25,000
- Who Needs it: All delayed deposit services businesses operating in Iowa
- Purpose: To ensure the public will receive compensation for any damages should the delayed deposit services business fail to comply with licensing law
- Who Regulates Delayed Deposit Services Businesses in Iowa: The Iowa Division of Banking
Background
Iowa statute 533D.3 requires all delayed deposit services businesses operating in the state to obtain a license with the Division of Banking. The Iowa legislature enacted the licensing laws and regulations to ensure that delayed deposit services businesses engage in ethical business practices. In order to provide financial security for the enforcement of the licensing law, delayed deposit services businesses must purchase and maintain a $25,000 surety bond to be eligible for licensure.
What is the Purpose of the Iowa Delayed Deposit Services Bond?
Iowa requires delayed deposit services businesses to purchase a surety bond as part of the application process to obtain a business license. The bond ensures that the public will receive compensation for financial harm if the delayed deposit services business fails to comply with the licensing regulations. In short, the bond is a type of insurance that protects the public if the delayed deposit services business breaks licensing laws.
How Can an Insurance Agent Obtain an Iowa Delayed Deposit Services Surety Bond?
BondExchange makes obtaining an Iowa Delayed Deposit Services Bond easy. Simply login to your account and use our keyword search to find the “delayed” bond in our database. Don’t have a login? Enroll now and let us help you satisfy your customers’ needs. Our friendly underwriting staff is available by phone (800) 438-1162, email or chat from 7:30 AM to 7:00 PM EST to assist you.
At BondExchange, our 40 years of experience, leading technology, and access to markets ensures that we have the knowledge and resources to provide your clients with fast and friendly service whether obtaining quotes or issuing bonds.
Is a Credit Check Required for the Iowa Delayed Deposit Services Bond?
Surety companies will run a credit check on the owners of the delayed deposit services company to determine eligibility and pricing for the Iowa Delayed Deposit Services bond. Owner’s with excellent credit and work experience can expect to receive the best rates. Owners with poor credit may be declined by some surety companies or pay higher rates. The credit check is a “soft hit”, meaning that the credit check will not affect the owner’s credit.
How Much Does the Iowa Delayed Deposit Services Bond Cost?
The Iowa Delayed Deposit Services surety bond can cost anywhere between $374 to $1,875 per year. Insurance companies determine the rate based on a number of factors including your customer’s credit score and experience. The chart below offers a quick reference for the approximate bond cost on the $25,000 bond requirement.
$25,000 Delayed Deposit Services Bond Cost
| Credit Score | Bond Cost (1 year) |
|---|---|
| 800+ | $375 |
| 650 – 799 | $500 |
| 600 – 649 | $1,000 |
| 550 – 599 | $1,875 |
*The credit score ranges do not include other factors that may result in a change to the annual premium offered to your customers, including but not limited to, years of experience and underlying credit factors contained within the business owner’s credit report.
How Does Iowa Define “Delayed Deposit Services Business?”
Iowa Statute 533D2 defines a delayed deposit services business as any business entity who performs one or more of the following services:
- Accepts a check dated subsequent to the date it was written
- Accepts a check dated on the date it was written and holds the check for a period of time prior to deposit or presentment pursuant to an agreement with, or any representation made to, the maker of the check, whether express or implied
How do Delayed Deposit Services Businesses Apply for a License in Iowa?
Delayed deposit services businesses in Iowa must navigate several steps to secure their license. Below are the general guidelines, but applicants should refer to the NMLS’s application guidelines for details on the process.
License Period – The Iowa Delayed Deposit Services License expires on December 31 of each year and must be renewed before the expiration date
Step 1 – Purchase a Surety Bond
Delayed deposit services businesses must purchase and maintain a $25,000 surety bond
Step 2 – Request a NMLS Account
The Iowa Delayed Deposit Services License application is submitted electronically through the Nationwide Multistate Licensing System (NMLS). To submit a license application, applicants must first request to obtain an NMLS account.
Step 3 – Complete the Application
All Iowa Delayed Deposit Services License applications can be completed online through the NMLS. Applicants must complete the entire application, and submit the following items:
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- Bank account information of the applicant’s LOC, operating or trust account(s) (if applicable)
- Financial statements certified by an executive company officer
- Company business plan containing the following information:
- Marketing strategy
- Products
- Target markets
- Operating structure the applicant intends to employ
- Certificate of Good Standing obtained from the Iowa Secretary of State
- Samples of documents used in the company’s regular course of business
- Company formation documents
- Management chart showing the company’s hierarchy
- Organizational chart showing the company’s ownership structure
While there is no application or licensing fee, delayed deposit services businesses must pay a $36.25 background check fee (per person) and a $15 credit report fee (per person)
How Do Iowa Delayed Deposit Services Businesses Renew Their License?
Delayed deposit services businesses can renew their license online through the NMLS. License holders need to simply login to their account to access their renewal application. The Iowa Delayed Deposit Services License expires on December 31 of each year and must be renewed before the expiration date.
What Are the Insurance Requirements for the Iowa Delayed Deposit Services License?
The State of Iowa does not require delayed deposit services businesses to obtain any form of liability insurance as a prerequisite to obtaining a license. Delayed deposit services businesses must purchase and maintain a $25,000 surety bond.
How Do Iowa Delayed Deposit Services Businesses File Their Bond?
Delayed deposit services businesses should submit the completed bond form, including the power of attorney, electronically through the NMLS. The surety bond requires signatures from both the surety company that issues the bond and a representative from the delayed deposit services company. The surety company should include the following information on the bond form:
- Legal name and address of entity/individual(s) buying the bond
- Surety company’s name, address and phone number
- Bond amount
- Date the bond goes into effect
- Date the bond is signed
What Can Iowa Delayed Deposit Services Businesses Do to Avoid Claims Against Their Bond?
In order to avoid claims made against their bond, delayed deposit services businesses in Iowa must follow all license regulations in the state. Including some of the most important issues below that tend to cause claims:
- Promptly pay all judgments recovered against the company
- Do not engage in any acts of fraud
What Other Insurance Products Can Agents Offer Delayed Deposit Services Businesses in Iowa?
Iowa does not require delayed deposit services businesses to purchase any form of liability insurance as a prerequisite to obtaining a license. However, most reputable businesses will seek to obtain this insurance anyway. Bonds are our only business at BondExchange, so we do not issue liability insurance, but our agents often utilize brokers for this specific line of business. A list of brokers in this space can be found here.
How Can Insurance Agents Prospect for Iowa Delayed Deposit Services Business Customers?
The NMLS conveniently provides a public database to search for active delayed deposit services businesses in Iowa. The database can be accessed here. Contact BondExchange for additional marketing resources. Agents can also leverage our print-mail relationships for discounted mailing services.
