Lexington Precious Metal Dealer Bond: A Comprehensive Guide
February 8, 2023
This guide provides information for insurance agents to help their customers obtain a Lexington Precious Metal Dealer bond.
At a Glance:
- Average Cost: Between $225 and $1,500 per year
- Bond Amount: $30,000
- Who Needs it: All precious metal dealers operating in Lexington, Kentucky
- Purpose: To protect the public from financial harm if the dealer violates the terms of their license
- Who Regulates Precious Metal Dealers in Lexington: The Lexington-Fayette Urban County Division of Revenue
Lexington-Fayette County Code of Ordinances 13-66 requires all precious metal dealers operating in the city to obtain an occupational license, also known as a business license, with the Division of Revenue before conducting business. The Urban County Council enacted the licensing requirement to ensure that precious metal dealers engage in ethical business practices. To provide financial security for the enforcement of the licensing law, precious metal dealers must purchase and maintain a $30,000 surety bond to be eligible for licensure.
What is the Purpose of the Lexington Precious Metal Dealer Bond?
Lexington requires precious metal dealers to purchase a surety bond as part of the application process to obtain an occupational 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 Lexington-Fayette County Code of Ordinances 13-66. Specifically, the bond protects the public in the event the dealer engages in any acts of fraud or breaches any consumer contracts. In short, the bond is a type of insurance that protects the public if the precious metal dealer violates the terms of their license.
How Can an Insurance Agent Obtain a Lexington Precious Metal Dealer Surety Bond?
BondExchange makes obtaining a Lexington Precious Metal Dealer bond easy. Simply log in to your account and use our keyword search to find the “Precious Metal Dealer” bond in our database. Don’t have a login? Enroll 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 Lexington Precious Metal Dealer Bond?
Surety companies will run a credit check on the applicant to determine eligibility and pricing for the Lexington Precious Metal 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 Lexington Precious Metal Dealer Bond Cost?
The Lexington Precious Metal Dealer bond can cost anywhere between $225 to $1,500 per year. 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 $30,000 bond requirement.
$30,000 Pawnbroker Bond Cost
|Credit Score||Bond Cost (1 year)|
|625 – 799||$300|
|600 – 624||$750|
|575 – 599||$900|
|500 – 574||$1,500|
*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?
Lexington requires precious metal dealers to purchase a surety bond as a prerequisite to obtaining an occupational license. To paraphrase the Lexington-Fayette County Code of Ordinance 13-1, a precious metal dealer is a person who purchases precious metals or gems such as gold, silver, platinum, or palladium from the general public. Retailers and wholesalers who purchase precious metals or gems from manufacturers are exempt from the bond requirement.
How do Precious Metal Dealers Apply for a License in Lexington?
Precious metal dealers in Lexington must navigate several steps to secure an occupational license. Below are the general guidelines, but applicants should contact the Division of Revenue for details on the process.
License Period – All Lexington Occupational Licenses expire on January 31st of each year and must be renewed before the expiration date.
Step 1 – Contact the Division of Revenue
To obtain an occupational license, precious metal dealers must contact the Division of Revenue. The department will walk them through the application process, provide them with all required forms, and answer any questions they may have. All applications will, at a minimum, require the following items:
- The dealer’s full name and business name
- Criminal conviction history
- An original surety bond
- Federal tax ID
Precious metal dealers are required to pay a $250 license fee and all applicants will be subject to a background check by the Lexington Police Department.
Step 2 – Purchase a Surety Bond
Precious metal dealers in Lexington must purchase and maintain a $30,000 surety bond.
How do Lexington Precious Metal Dealers Renew Their Licenses?
Precious metal dealers should contact the Division of Revenue to obtain a renewal application before their license expires. All Lexington Occupational Licenses expire on January 31st of each year and must be renewed before the expiration date. Renewal applications submitted after January 31st will be subject to a late penalty fee.
What are the Insurance Requirements for the Lexington Precious Metal Dealers?
Lexington does not require precious metal dealers to purchase any form of liability insurance as a prerequisite to obtaining a precious metal dealer license. Precious metal dealers must purchase and maintain a $30,000 surety bond.
How Do Lexington Precious Metal Dealers File Their Bonds?
Precious metal dealers should submit their completed bond forms, including the power of attorney, to the following address:
Lexington Division of Revenue
200 E. Main Street
Lexington, KY 40507
The surety bond requires 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 of the entity/individual(s) buying the bond
- Surety company’s name, city, and state of incorporation
- Date the bond is signed
What Can Lexington Precious Metal Dealers do to Avoid Claims Against Their Bonds?
To avoid claims against their bonds, precious metal dealers in Lexington 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 Precious Metal Dealers in Lexington?
Lexington does not require precious metal 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 Lexington Precious Metal Dealer Customers?
Lexington unfortunately does not provide a public database of active precious metal dealers in the city. We suggest contacting the Division of Revenue for this information. Contact BondExchange for additional marketing resources. Agents can also leverage our print-mail relationships for discounted mailing services.