Utah Collection Agency Bond: A Comprehensive Guide
August 27, 2021
This guide provides information for insurance agents to help their customers obtain Utah Collection Agency Bonds
At a Glance:
- Average Cost: Between $100 to $500 per year based on the applicant’s credit
- Bond Amount: $10,000
- Who Needs it: All collection agencies operating in Utah
- Purpose: To ensure the public will receive compensation for any damages should the collection agency violate registration law
- Who Regulates Collection Agencies In Utah: The Utah Division of Corporations and Commercial Code
Background
Utah statute 12-1-1 requires all collection agencies operating in the state to register with the Division of Corporations and Commercial Code. The Utah legislature enacted the registration laws and regulations to ensure that collection agencies engage in ethical business practices. In order to provide financial security for the enforcement of the registration law, collection agencies must purchase and maintain a $10,000 surety bond to be eligible for registration.
What is the Purpose of the Utah Collection Agency Bond?
Utah requires collection agencies to purchase a surety bond as part of the application process to obtain a business registration. The bond ensures that the public will receive compensation for financial harm if the collection agency fails to comply with the regulations set forth in the Utah statute 12-1-2. Specifically, the bond protects the public in the event the collection agency fails to pay money owed to creditors or breaches any contracts made with clients. In short, the bond is a type of insurance that protects the public if the collection agency breaks registration laws.
How Can an Insurance Agent Obtain a Utah Collection Agency Surety Bond?
BondExchange makes obtaining a Utah Collection Agency Bond easy. Simply login to your account and use our keyword search to find the “collection” 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 Utah Collection Agency Bond?
Surety companies will run a credit check on the owners of the collection agency firm to determine eligibility and pricing for the Utah Collection Agency bond. Owners 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 Utah Collection Agency Bond Cost?
The Utah Collection Agency Bond can cost anywhere between $100 to $500 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 $10,000 bond requirement.
$25,000 Residential Mortgage Loan Servicer Bond Cost
| Credit Score | Bond Cost (1 year) |
|---|---|
| 650+ | $100 |
| 625 – 649 | $125 |
| 600 – 624 | $188 |
| 550 – 599 | $400 |
| 450 – 549 | $500 |
How Does Utah Define “Collection Agency?”
The Utah Division of Corporations and Commercial Code defines a collection agency as any business entity who collects debts on behalf of third party creditors.
How do Collection Agencies Apply For a Registration in Utah?
Collection agencies in Utah must navigate several steps to secure their registration. Below are the general guidelines, but applicants should refer to the application form for details on the process.
Registration Period – The Utah Collection Agency Registration is valid for one year from the date of issuance and must be renewed before the expiration date
Step 1 – Purchase a Surety Bond
Collection agencies must purchase and maintain a $10,000 surety bond.
Step 2 – Complete the Application
All Utah Collection Agency Registration applications should be mailed to the following address:
Utah Division of Corporations & Commercial Code
PO Box 146705
Salt Lake City Utah 84114-6705
Collection agencies must complete the application in its entirety, and pay a $32 registration fee.
How Do Utah Collection Agencies Renew Their Registration?
Collection agencies should mail their completed renewal application, including a $32 renewal fee, to the following address:
Utah Division of Corporations & Commercial Code
PO Box 146705
Salt Lake City Utah 84114-6705
The Utah Collection Agency Registration is valid for one year from the date of issuance and must be renewed before the expiration date
What Are the Insurance Requirements for the Utah Collection Agency Registration?
Utah does not require collection agencies to purchase any form of liability insurance as a prerequisite to obtaining a business registration. Collection agencies must purchase and maintain a $10,000 surety bond.
How Do Utah Collection Agencies File Their Bond?
Collection agencies should mail the completed bond form, including the power of attorney, to the following address:
Utah Division of Corporations & Commercial Code
PO Box 146705
Salt Lake City Utah 84114-6705
The collection agency surety bond requires signatures from both the surety company that issues the bond and a representative from the collection agency. The surety company should include the following information on the bond form:
- Legal name of entity/individual(s) buying the bond
- Surety company’s name
- Bond amount
- Date the bond is signed
- Date the bond goes into effect
What Can Utah Collection Agencies Do to Avoid Claims Against Their Bond?
To avoid claims on their bond, collection agencies in Utah must follow all registration regulations in the state, including some of the most important issues below that tend to cause claim
- Do not engage in any acts of fraud
- Pay all funds owed to creditors
- Do not engage in illegal collection practices
What Other Insurance Products Can Agents Offer Collection Agencies in Utah?
Utah does not require collection agencies to purchase any form of liability insurance as a prerequisite to obtaining a business registration . 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 Utah Collection Agency Customers?
Utah conveniently provides a public database to search for active collection agencies in the state. The database can be accessed here. Contact BondExchange for additional marketing resources. Agents can also leverage our print-mail relationships for discounted mailing services.
