Connecticut Secondhand Dealer Bond: A Comprehensive Guide
At a Glance:
- Lowest Cost: $100 per year or $10 per month, based on the applicant’s credit
- Bond Amount: $10,000
- Who Needs it: All secondhand dealers operating in Connecticut
- Purpose: To protect the public from financial harm if the secondhand dealer violates the terms of their license
- Who Regulates Secondhand Dealers in Connecticut: The secondhand dealer’s local law enforcement agency
Background
Connecticut General Statute 21-47d requires all secondhand dealers operating in the state to obtain a license from their local police department before conducting business. The Connecticut legislature enacted the licensing requirement to ensure that secondhand dealers engage in ethical business practices. To provide financial security for the enforcement of the licensing law, secondhand dealers must purchase and maintain a $10,000 surety bond to be eligible for licensure.
Secondhand dealers who do not have an organized police department in their city or town must instead obtain a license from the Department of Emergency Services and Public Protection.
What is the Purpose of the Connecticut Secondhand Dealer Bond?
Connecticut requires secondhand dealers to purchase a surety bond as part of the application process to obtain a secondhand dealer license. The bond ensures that the public will be protected from financial harm if the dealer fails to comply with the regulations set forth in the Connecticut General Statute 21-47d. Specifically, the bond protects the public in the event the dealer engages in any acts of fraud or breaches consumer contracts. In short, the bond is a type of insurance that protects the public if the secondhand dealer violates the terms of their license.
How Can an Insurance Agent Obtain a Connecticut Secondhand Dealer Surety Bond?
BondExchange makes obtaining a Connecticut Secondhand Dealer surety bond easy. Simply login to your account and use our keyword search to find the “Secondhand Dealer” bond in our database. Don’t have a login? Gain access 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.
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Is a Credit Check Required for the Connecticut Secondhand Dealer Bond?
Surety companies will run a credit check on the applicant to determine eligibility and pricing for the Connecticut Secondhand Dealer bond. Applicants with excellent credit and work experience can expect to receive the best rates. Applicants 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 applicant’s credit.
How Much Does the Connecticut Secondhand Dealer Bond Cost?
The Connecticut Secondhand Dealer bond can cost anywhere between $100 to $500 per year or $10 to $50 per month. 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.
$10,000 Secondhand Dealer Bond Cost
| Credit Score | Bond Cost (1 year) | Bond Cost (1 month) |
|---|---|---|
| 625+ | $100 | $10 |
| 600 – 624 | $150 | $15 |
| 550 – 599 | $250 | $25 |
| 525 – 549 | $300 | $30 |
| 500 – 524 | $500 | $50 |
*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.
Who is Required to Purchase the Bond?
Connecticut requires secondhand dealers to purchase a surety bond as a prerequisite to obtaining a secondhand dealer license. To paraphrase Connecticut General Statute 21-39a, a secondhand dealer is a person who purchases personal property of any type from a person who is not a wholesaler, for the purpose of reselling or exchanging the property.
Exemptions to this definition include:
- Antique dealers
- Art dealers
- Coin and stamp dealers
- Precious metal or stone dealers
- Pawnbrokers
- Consignment shop operators
- Special collectible dealers
- Musical instrument dealers
- Used book dealers
- Used clothing dealers
- Used children’s products dealers
- Used sporting equipment dealers
- Motor vehicles dealers
- Auctioneers
- Junk dealers
- Scrap metal dealers
- Recycling facilities
- Charitable or religious corporations
BondExchange now offers monthly pay-as-you-go subscriptions for surety bonds. Your customers are able to purchase their bonds on a monthly basis and cancel them anytime. Learn more here.
How Do Secondhand Dealers Apply for a License in Connecticut?
Secondhand dealers in Connecticut must navigate several steps to secure a secondhand dealer license. Below are the general guidelines, but applicants should refer to the licensing statutes for details on the process.
License Period – All Connecticut Secondhand Dealer Licenses are valid for one year from the date of issuance and must be renewed before the expiration date.
Step 1 – Contact Your Local Law Enforcement Agency
To obtain a license, secondhand dealers must contact their local law enforcement agency. The agency will walk them through the application process, provide them with all required forms, and also answer any questions they may have. All license applications will, at a minimum, require the following information:
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- The dealer’s full name and business name
- Residence and employment history
- A record of all criminal convictions
- A full set of the dealer’s fingerprints
Secondhand dealers must also get the application notarized and pay a $250 application fee. Applicants who do not have an organized police department in their city or town must instead apply for a license with the Department of Emergency Services and Public Protection.
Step 2 – Purchase a Surety Bond
Secondhand dealers operating in Connecticut are required to purchase and maintain a $10,000 surety bond.
How do Connecticut Secondhand Dealers Renew Their Licenses?
Secondhand dealers should contact their local law enforcement agency to obtain a renewal application before their license expires. Secondhand dealers must renew their licenses at least sixty days before the expiration date to avoid a lapse in coverage. All Connecticut Secondhand Dealer Licenses are valid for one year from the date of issuance and must be renewed before the expiration date.
What are the Insurance Requirements for Connecticut Secondhand Dealers?
Connecticut does not require secondhand dealers to purchase any form of liability insurance. However, secondhand dealers must purchase and maintain a $10,000 surety bond.
How Do Connecticut Secondhand Dealers File Their Bonds?
Secondhand dealers should submit their completed bond forms, including the power of attorney, to their local law enforcement agency.
The surety bond requires signatures, including witness signatures, from both the surety company that issues the bond and from the dealer. The surety company should include the following information on the bond form:
- Legal name and address of the entity/individual(s) buying the bond
- Surety company’s name, address, and state of incorporation
- Secondhand dealer’s business address
- Date the bond is signed
What Can Connecticut Secondhand Dealers do to Avoid Claims Made Against Their Bonds?
To avoid claims against their bonds, secondhand dealers in Connecticut must ensure that they:
- Do not engage in any acts of fraud
- Do not breach contracts made with consumers
What Other Insurance Products Can Agents Offer Secondhand Dealers in Connecticut?
Connecticut does not require secondhand dealers to purchase liability insurance. However, most reputable businesses will purchase this insurance anyway. Bonds are our only business at BondExchange, so we do not issue any other types of 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 Connecticut Secondhand Dealer Customers?
Connecticut unfortunately does not provide a public database of active secondhand dealers in the state. However, we suggest contacting the Department of Emergency Services and Public Protection for a list of licensed secondhand dealers. Contact BondExchange for additional marketing resources. Agents can also leverage our print-mail relationships for discounted mailing services.