North Carolina Precious Metals Dealer Bond: A Comprehensive Guide
This guide provides information for insurance agents to help their customers obtain a North Carolina Precious Metals Dealer Bond
At a Glance:
- Lowest Cost: Between $100 to $200 per year based on the applicant’s credit history
- Bond Amount: $10,000
- Who Needs it: All precious metals dealers operating in North Carolina
- Purpose: To ensure the public will receive compensation for any damages if the dealer commits fraud or acts unethically
- Who Regulates Precious Metal Dealers in North Carolina: The dealer’s local law enforcement agency
North Carolina Statute 66-407 requires all precious metals dealers operating in the state to obtain a permit from their local law enforcement agency. The North Carolina legislature enacted the permitting requirement to ensure that dealers engage in ethical business practices. To provide financial security for the enforcement of the permitting requirement, precious metals dealers must purchase and maintain a $10,000 surety bond to be eligible for a permit.
What is the Purpose of the North Carolina Precious Metals Dealer Bond?
North Carolina requires precious metals dealers to purchase a surety bond as part of the application process to obtain a permit. The bond ensures that the public will receive compensation for financial harm if the dealer fails to comply with the regulations set forth in North Carolina Statute 66-409. 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 precious metals dealer violates the terms of their permit.
How Can an Insurance Agent Obtain a North Carolina Precious Metals Dealer Surety Bond?
BondExchange makes obtaining a North Carolina Precious Metals Dealer Bond easy. Simply login to your account and use our keyword search to find the “Precious Metals” 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 (800) 438-1162, email or chat from 7:30 AM to 7:00 PM EST to assist you.
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Is a Credit Check Required for the North Carolina Precious Metals Dealer Bond?
Surety companies will run a credit check on the dealer to determine eligibility and pricing for the North Carolina Precious Metals Dealer bond. Dealers with excellent credit and work experience can expect to receive the best rates. Dealers 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 dealer’s credit.
How Much Does the North Carolina Precious Metals Dealer Bond Cost?
The North Carolina Precious Metals Dealer bond can cost anywhere between $100 to $200 of the bond amount per year. Insurance companies determine the rate based on several factors including your customer’s credit score and experience. The chart below offers a quick reference for the cost of the $10,000 bond requirement.
$10,000 Precious Metals Dealer Bond Cost
|Credit Score||Bond Cost (1 year)||Bond Cost (1 month)|
|500 – 624||$200||$20|
*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?
North Carolina requires precious metals dealers to purchase a bond to obtain a business permit. To paraphrase North Carolina Statute 66-406 a precious metals dealer is a person who purchases precious metals such as gold, silver, platinum, or palladium from the general public.
Exemptions to this definition include:
- Retail merchants purchasing precious metals from manufacturers or wholesalers
- Licensed pawnbrokers
- Retail merchants with a permanent place of business that acquire precious metals by trading their regularly sold merchandise as long as they do not provide the seller with money
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 Precious Metals Dealers Apply for a Permit in North Carolina?
Precious metals dealers in North Carolina must navigate several steps to obtain a permit. Below are the general guidelines, but dealers should refer to the permitting statutes for details on the process.
Permit Period – All North Carolina Precious Metals Dealer Permits are valid for 12 months from the date of issuance and must be renewed before the expiration date
Step 1 – Contact Your Local Law Enforcement Agency
To obtain a permit, precious metals dealers must contact their local law enforcement agency. The agency will walk them through the application process, provide them with all required forms, and answer any questions they may have. All permit applications will, at a minimum, require the following information:
- The dealer’s full name and business name
- Their current address as well as all addresses used during the preceding five years
- A physical description of the dealer, their age, driver’s license number and a recent photograph
- A record of all felony convictions as well as other convictions during the preceding five years.
- A full set of the dealer’s fingerprints
Dealers must pay a $180 application fee and obtain a separate permit for each place of business.
Step 2 – Purchase a Surety Bond
All precious metals dealers operating in North Carolina must purchase and maintain a $10,000 surety bond
How do North Carolina Precious Metals Dealers Renew Their Permits?
Dealers should contact their local law enforcement agency to obtain a renewal application before their permit expires. Depending on the dealer’s municipality, the agency may send them a renewal notice. All North Carolina Precious Metals Dealer Permits are valid for 12 months from the date of issuance and must be renewed before the expiration date.
What are the Insurance Requirements for Precious Metals Dealers in North Carolina?
The state of North Carolina does not require precious metals dealers to purchase any form of liability insurance as a prerequisite to obtaining a permit. However, dealers may need to purchase insurance before receiving a local business or tax license. Precious metals dealers must purchase and maintain a $10,000 surety bond.
How Do North Carolina Precious Metals Dealers File Their Bonds?
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 broker. The surety company should include the following information on the bond form:
- County the dealer is operating in
- Legal name and address of the entity/individual(s) buying the bond
- Surety company’s name and state of incorporation
- Date the bond is signed
What Can North Carolina Precious Metals Dealers do to Avoid Claims Against Their Bonds?
To avoid claims against their bonds, precious metals dealers in North Carolina 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 Metals Dealers in North Carolina?
North Carolina does not require precious metals dealers to purchase liability insurance. However, most reputable dealers 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 North Carolina Precious Metals Dealer Customers?
North Carolina unfortunately does not provide a public database of active precious metals dealers in the state. We suggest contacting individual local law enforcement agencies for a list of dealers in their jurisdictions. Contact BondExchange for additional marketing resources. Agents can also leverage our print-mail relationships for discounted mailing services.