What is a Surety Bond? Surety Bonds Explained.

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Law 6901(a)( 1 )(A)(Mc, Kinney 2000). Facts: Mr. A is the President of ABC Co., a finance company located in New York, which is not an insurer. Mr. An explains a circumstance in which an individual demands a loan from his company. Instead of issuing the loan, ABC Co. directs them to a monetary organization that, in turn, concerns the loan.

would then ensure the loan under a surety bond, for a fee. Mr. A want to understand whether these activities would constitute doing an insurance company, for which licensing would be needed.  PBIB Insurance : Mr. A asked whether ABC Co. would be doing an insurance business within the meaning of N.Y.

Law 1101 (Mc, Kinney 2000 & Supp. 2002). N.Y. Ins. Law 1102(a) (Mc, Kinney 2000) forbids any person, company, association, corporation or joint-stock business from doing an insurance coverage service in this state, unless accredited as an insurer or excused from licensing. N.Y. Ins. Law 1101(b)( 1) (Mc, Kinney 2000 & Supp.

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(focus supplied) Subparagraphs (C), (D) and (E) are not relevant to this discussion. N.Y. Ins. Law 1101(a)( 1) (Mc, Kinney 2000 & Supp. 2002) defines "insurance coverage agreement" as follows: (a)( 1) [A] ny arrangement or other transaction where one celebration, the "insurance provider", is obliged to confer advantage of monetary value upon another party, the "insured" or "recipient", reliant upon the happening of a fortuitous occasion in which the insured or recipient has, or is expected to have at the time of such happening, a product interest which will be adversely affected by the taking place of such occasion.

Ins. Law 1101(a)( 2) (Mc, Kinney 2000 & Supp. 2002) defines "fortuitous event" as "any occurrence or failure to happen which is, or is assumed by the parties to be, to a considerable degree beyond the control of either celebration." In accordance with the above, if ABC Co. guarantees the bank that it will pay the loan due to the monetary default of a customer, such activity would make up doing an insurance coverage business, for which licensing would be needed.