Indiana Pawnbroker Bond: A Comprehensive Guide

This guide provides information for insurance agents to help their customers obtain an Indiana Pawnbroker bond.

At a Glance:

• Average Cost: $100 per year or $10 per month
• Bond Amount: Between $50,000 to $200,000
• Who Needs it: All pawnbrokers operating in Indiana
• Purpose: To protect the public from financial harm if the pawnbroker violates the terms of their license
  
• Who Regulates Pawnbrokers in Indiana: The Indiana Department of Financial Institutions

Background

Indiana Code 28-7-5-3 requires all pawnbrokers operating in the state to obtain a license from the Department of Financial Institutions before conducting business. The Indiana 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 surety bond to be eligible for licensure.

What is the Purpose of the Indiana Pawnbroker Bond?

Indiana 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 Indiana Code 28-7-5-5.5. Specifically, the bond protects the public in the event the broker engages in any acts of fraud, breaches consumer contracts, or fails to pay any required taxes, fines, or fees. 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 an Indiana Pawnbroker Surety Bond?

BondExchange makes obtaining an Indiana 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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How is the Bond Amount Determined?

Indiana requires pawnbrokers to obtain a $50,000 surety bond per location they plan to operate, up to a maximum of $200,000.

Is a Credit Check Required for the Indiana Pawnbroker Bond?

No, a credit check is not required for the Indiana Pawnbroker bond. Because the bond is considered relatively low risk, the same low rate is offered to all pawnbrokers in the state regardless of their credit history.

How Much Does the Indiana Pawnbroker Bond Cost?

The Indiana Pawnbroker bond costs just $100 per year or $10 per month.

Who is Required to Purchase the Indiana Pawnbroker Bond?

Indiana requires pawnbrokers to purchase a surety bond as a prerequisite to obtaining a pawnbroker license. To paraphrase Indiana Code 28-7-5-2, a pawnbroker is a person who issues loans at interest 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 Indiana?

Pawnbrokers in Indiana must navigate several steps to secure a pawnbroker license. Below are the general guidelines, but applicants should contact the Department of Financial Institutions for details on the process.

License Period – All Indiana Pawnbroker Licenses expire on December 31st of each year and must be renewed before the expiration date.

Step 1 – Meet the Requirements

To qualify for a license, pawnbrokers operating in Indiana must meet the following criteria:

• • Have a minimum of two years of finance related experience
  • Have at least $75,000 in net worth and $50,000 in liquid assets

Step 2 – Purchase a Surety Bond

Pawnbrokers operating in Indiana are required to purchase and maintain a $50,000 surety bond per location they plan to operate, up to a maximum of $200,000.

Step 3 – Submit an Application

All Indiana Pawnbroker License applications should be submitted to the Department of Financial Institutions at the following address:

30 South Meridian Street, Suite 300
Indianapolis, Indiana 46204-2759

Applicants must complete the form in its entirety and submit the following items:

• • $50,000 surety bond per location
  • Credit report
  • Criminal background check
  • Copy of Indiana business plan
  • Sample copy of completed pawn ticket
  • Sample copy of completed bill of sale
  • Property and casualty insurance (limits outlined below)
  • Three references willing to acknowledge the pawnbrokers financial responsibility and character
  • One of the following:
    • Financial statements prepared by an independent CPA
    • Most recent 10k filing with the SEC

Pawnbrokers must pay a $1,000 initial license fee by check or money order plus $500 for each additional location. All applicants will be contacted to schedule an interview at the Department of Financial Institution’s office prior to being issued a license.

How do Indiana Pawnbrokers Renew Their License?

Pawnbrokers will receive a renewal notice via email with instructions on how to renew their license online. Renewal applications submitted after the expiration date are subject to late fees. All Indiana Pawnbroker Licenses expire on December 31st of each year and must be renewed before the expiration date.

What are the Insurance Requirements for Indiana Pawnbrokers?

Indiana requires pawnbrokers to obtain property and casualty insurance coverage for pawned items in an amount of $25,000 or two times the total loans outstanding amount, whichever is greater. Pawnbrokers must also purchase and maintain a $50,000 surety bond per location they plan to operate.

How Do Indiana Pawnbrokers File Their Bonds?

Pawnbrokers should submit their completed bond forms, including the power of attorney, to the Department of Financial Institutions at the following address:

30 South Meridian Street, Suite 300
Indianapolis, Indiana 46204-2759

The surety bond requires 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, city and county of the entity/individual(s) buying the bond
• Surety company’s name and contact information
• Bond amount
• Date the bond is signed and goes into effect

What Can Indiana Pawnbrokers Do to Avoid Claims Against Their Bonds?

To avoid claims against their bonds, pawnbrokers in Indiana must ensure that they:

• Do not engage in any acts of fraud
• Do not breach contracts made with consumers
• Pay all required taxes, fines, and fees

What Other Insurance Products Can Agents Offer Pawnbrokers in Indiana?

Indiana requires pawnbrokers to obtain property and casualty insurance coverage (limits outlined above). 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 Indiana Pawnbroker Customers?

Indiana conveniently provides a public database to search for active pawnbrokers in the state. Contact BondExchange for additional marketing resources. Agents can also leverage our print-mail relationships for discounted mailing services.