Tex.
Fin. Code Section 394.206
Bond; Insurance
(a)
A provider shall, at the time the provider files an initial or renewal registration application with the commissioner, file:(1)
a surety bond; or(2)
evidence that the provider maintains an insurance policy in a form approved by the commissioner.(b)
The bond or insurance must:(1)
run concurrently with the period of registration;(2)
be available to pay damages and penalties to consumers directly harmed by a violation of this subchapter;(3)
be in favor of this state for the use of this state and the use of a person who has a cause of action under this subchapter against the provider;(4)
if a bond:(A)
be in an amount equal to the average daily balance of the provider’s trust account serving Texas consumers over the six-month period preceding the issuance of the bond, or in the case of an initial application, in an amount determined by the commissioner, but not less than $25,000 or more than $100,000, if the provider receives and holds money paid by or on behalf of a consumer for disbursement to the consumer’s creditors; or(B)
be in the amount of $50,000, if the provider does not receive and hold money paid by or on behalf of a consumer for disbursement to the consumer’s creditors;(5)
if an insurance policy:(A)
provide coverage for professional liability, employee dishonesty, depositor’s forgery, and computer fraud in an amount not less than $100,000;(B)
be issued by a company rated at least “A-” or its equivalent by a nationally recognized rating organization; and(C)
provide for 30 days advance written notice of termination of the policy to be provided to the commissioner;(6)
be issued by a bonding, surety, or insurance company that is authorized to do business in the state; and(7)
be conditioned on the provider and its agents complying with all state and federal laws, including regulations, governing the business of debt management services.(c)
In lieu of a bond or insurance, the finance commission by rule may establish alternative financial requirements to provide substantially equivalent protection to pay damages and penalties to consumers directly harmed by a violation under this subchapter.(d)
The commissioner may adjust the amount of the provider’s bond or insurance only when the provider applies for renewal of registration and requests a review of the bond or insurance amount.
Source:
Section 394.206 — Bond; Insurance, https://statutes.capitol.texas.gov/Docs/FI/htm/FI.394.htm#394.206 (accessed Jun. 5, 2024).
