6-1205

6-1205. Bond required; conditions; notice;
cancellation; substitution

A. Each application for a license shall be accompanied by and each licensee shall
maintain at all times a bond executed by the licensee as principal and a surety company
authorized to do business in this state as surety. The bond shall be in the amount of
twenty-five thousand dollars for a licensee with five or fewer authorized delegates and
locations, one hundred thousand dollars for a licensee with more than five but fewer than
twenty-one authorized delegates and locations and an additional five thousand dollars for
each authorized delegate and location in excess of twenty but fewer than two hundred one
authorized delegates and locations, to a maximum of two hundred fifty thousand dollars
and an additional five thousand dollars for each authorized delegate and location in
excess of two hundred authorized delegates and locations, to a maximum of five hundred
thousand dollars.

B. The bond shall be conditioned on the faithful compliance of the licensee,
including its directors, officers, authorized delegates and employees, with this
chapter. The bond shall be payable to any person injured by the wrongful act, default,
fraud or misrepresentation of the licensee, his authorized delegates or his employees or
to the state for the benefit of the person injured. Only one bond is required for any
licensee irrespective of the number of officers, directors, locations, employees or
authorized delegates of that licensee.

C. The bond shall remain in effect until cancelled by the surety, which
cancellation may be had only after thirty days' written notice to the
superintendent. That cancellation does not affect any liability incurred or accrued
during the thirty day period.

D. In lieu of the bond prescribed in this section, an applicant for a license or a
licensee may deposit with the superintendent cash or alternatives to cash acceptable to
the superintendent in the amount of the required bond. Notwithstanding section 35-155,
subsection E, the principal amount of the deposit shall be released only on written
authorization of the superintendent or on the order of a court of competent
jurisdiction. The principal amount of the deposit shall not be released to the licensee
before the expiration of five years from the first occurrence of any of the following:

1. The date of substitution of a bond for a cash alternative unless the
superintendent determines in his discretion that the bond constitutes adequate security
for all past, present or future obligations of the licensee. After that determination,
the cash alternative may be immediately released.

2. The surrender of the license.

3. The revocation of the license.

4. The expiration of the license.

E. Notwithstanding subsections A through D of this section, if the required amount
of the bond is reduced, whether by change in the number of authorized delegates or
locations or by legislative action, a cash deposit in lieu of that bond shall not be
correspondingly reduced but shall be maintained at the higher amount until the expiration
of three years from the effective date of the reduction in the required amount of that
bond unless the superintendent in his discretion determines otherwise.