Kentucky Pawnbroker Bond: A Comprehensive Guide
At a Glance:
- Average Cost: $100 per year or $10 per month
- Bond Amount: $1,000
- Who Needs it: All pawnbrokers operating in Kentucky
- Purpose: To protect the public from financial harm if the pawnbroker violates the terms of their license
- Who Regulates Pawnbroker in Kentucky: The city/county where the pawnbroker is conducting business
Kentucky Revised Statute 226.020 requires all pawnbrokers operating in the state to obtain a license with their city or county before conducting business. The Kentucky legislature enacted the licensing requirement to ensure that pawnbrokers engage in ethical business practices. To provide financial security for the enforcement of the licensing law, pawnbrokers must purchase and maintain a $1,000 surety bond to be eligible for licensure.
What is the Purpose of the Kentucky Pawnbroker Bond?
Kentucky requires pawnbrokers to purchase a surety bond as part of the application process to obtain a pawnbroker license. The bond ensures that the public will be protected from financial harm if the broker fails to comply with the regulations set forth in the Kentucky Revised Statute 226.020. Specifically, the bond protects the public in the event the broker 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 pawnbroker violates the terms of their license.
How Can an Insurance Agent Obtain a Kentucky Pawnbroker Surety Bond?
BondExchange makes obtaining a Kentucky Pawnbroker bond easy. Simply log in to your account and use our keyword search to find the “Pawnbroker” 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 at (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 Kentucky Pawnbroker Bond?
No, a credit check is not required for the Kentucky Pawnbroker bond. Because the bond is considered relatively low risk, the same low rate is offered to all pawnbrokers operating in the state, regardless of their credit history.
How Much Does the Kentucky Pawnbroker Bond Cost?
The Kentucky Pawnbroker bond costs just $100 per year or $10 per month.
Who is Required to Purchase the Bond?
Kentucky requires pawnbrokers to purchase a surety bond as a prerequisite to obtaining a pawnbroker license. To paraphrase Kentucky Revised Statute 226.010, a pawnbroker is a person who issues loans to individuals that leave their property, as collateral, for the broker to sell on condition that the customer may repurchase the property within a fixed period of time.
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 Pawnbrokers Apply for a License in Kentucky?
Kentucky pawnbrokers that are operating within the legal limits of a city must apply for licensure through the city. Brokers operating outside the limits of any city must obtain a bond from the county their store is located in. Below are the general guidelines, but applicants should refer to the licensing statutes for details on the process.
License Period – All Kentucky Pawnbroker Licenses are valid for one year from the date of issuance and must be renewed before the expiration date.
Step 1 – Contact Your Local Municipal Authority
To obtain a license, pawnbrokers must contact their local municipal authority. The city or county government will walk them through the application process, provide them with all required forms, and answer any questions they may have.
Step 2 – Purchase a Surety Bond
Pawnbrokers operating in Kentucky are required to purchase and maintain a $1,000 surety bond.
How do Kentucky Pawnbrokers Renew Their License?
Pawnbrokers should contact their local municipal authority to obtain a renewal application before their license expires. All Kentucky Pawnbroker 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 the Kentucky Pawnbrokers?
Kentucky does not require pawnbrokers to purchase any form of liability insurance. Pawnbrokers must purchase and maintain a $1,000 surety bond.
How Do Kentucky Pawnbrokers File Their Bonds?
Pawnbrokers should submit their completed bond forms, including the power of attorney, to their local municipal authority.
The surety bond requires signatures, including witness signatures, from both the surety company that issues the bond and from the broker. The surety company should include the following information on the bond form:
- Legal name of the entity/individual(s) buying the bond
- Surety company’s name and state of incorporation
- Name of the obligee and the license type applied for
- Bond amount
- Date the bond goes into effect
- Date the bond is signed
What Can Kentucky Pawnbrokers do to Avoid Claims Against Their Bonds?
To avoid claims against their bonds, pawnbrokers in Kentucky 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 Pawnbrokers in Kentucky?
Kentucky does not require pawnbrokers to purchase liability insurance as a prerequisite to obtaining a business tax certificate. 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 Kentucky Pawnbroker Customers?
Kentucky unfortunately does not provide a public database of active pawnbrokers in the state. We suggest contacting local municipal authorities for a list of licensed pawnbrokers within that city/county. Contact BondExchange for additional marketing resources. Agents can also leverage our print-mail relationships for discounted mailing services.