Ohio Pawnbroker Bond: A Comprehensive Guide

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

At a Glance:

• Average Cost: Between $375 to $3,500 per year based on the applicant’s credit
• Bond Amount: $50,000
• Who Needs it: Licensed pawnbrokers operating in Ohio who do not meet the minimum liquid asset requirements
• Purpose: To protect the public from financial harm if the pawnbroker violates the terms of their license
  
• Who Regulates Pawnbrokers in Ohio: The Ohio Division of Financial Institutions

Background

Ohio Revised Code 4727.02 requires all pawnbrokers operating in the state to obtain a pawnbroker license with the Division of Financial Institutions before conducting business. The Ohio 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 who do not meet the minimum liquid asset requirements must purchase and maintain a $50,000 surety bond to be eligible to renew their license.

Who is Required to Purchase the Ohio Pawnbroker Bond?

Ohio requires pawnbrokers to meet certain financial liquidity requirements to obtain and renew their business license. Pawnbrokers must demonstrate financial liquidity by submitting proof of at least $125,000 in liquid assets when applying for a license. Once pawnbrokers obtain a license, they must continually maintain at least $75,000 in liquid assets. If pawnbrokers cannot demonstrate at least $75,000 in liquid assets when renewing their license, they must purchase and maintain a $50,000 surety bond.

To paraphrase Ohio Revised Code 4727.01, 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. Federally insured banks, savings and loan associations, and credit unions are exempt from the requirement.

What is the Purpose of the Ohio Pawnbroker Bond?

The Ohio Pawnbroker bond ensures that the public will be protected from financial harm if the broker fails to comply with the regulations set forth in Ohio Revised Code 4727.20. Specifically, the bond protects the public in the event the broker engages in 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 an Ohio Pawnbroker Surety Bond?

BondExchange makes obtaining an Ohio 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 Ohio Pawnbroker Bond?

Surety companies will run a credit check on the applicant to determine eligibility and pricing for the Ohio Pawnbroker 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 Ohio Pawnbroker Bond Cost?

The Ohio Pawnbroker bond can cost anywhere between $375 to $3,500 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 $50,000 bond requirement.

$50,000 Pawnbroker Bond Cost

*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.

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 Ohio Pawnbrokers Obtain a License?

Pawnbrokers in Ohio must navigate several steps to secure a pawnbroker license and must obtain a separate license for each pawn shop location they operate. Below are the general guidelines, but applicants should refer to the application checklist for details on the process.

License Period – All Ohio Pawnbroker Licenses expire on June 30 of each even-numbered year (2024, 2026, etc.) and must be renewed before the expiration date.

Step 1 – Complete an Application

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

77 S. High Street, 21st Floor
Columbus, OH  43215

Pawnbrokers must complete the application in its entirety and submit the following items:

• • $800 license fee (per location)
  • Criminal background check
  • Notarized consent form
  • Financial statement showing at least $125,000 in liquid assets
  • Sample of the broker’s computer system and anti-virus software
  • Sample of the proposed pawn/purchase forms

Financial statements must be dated within 90 days prior to the application submission. License fees are prorated, so any license issued between January 1 and June 30 of an even-numbered year will only be subject to a $500 fee. Contact the Division of Financial Institutions for additional assistance in the application process.

Step 2 – Meet the Financial Requirements

After obtaining a license, pawnbrokers are required to maintain at least $75,000 in liquid assets. Pawnbrokers that are unable to do this must purchase a $50,000 surety bond when renewing their license.

How do Ohio Pawnbrokers Renew Their License?

The Division of Financial Institutions will send the pawnbroker a renewal application at least one month before the expiration date. To renew their license, pawnbrokers must ensure that they:

• Maintain $75,000 in liquid assets or purchase a surety bond
• Complete eight hours of continuing education

All Ohio Pawnbroker Licenses expire on June 30 of each even-numbered year (2024, 2026, etc.) and must be renewed before the expiration date.

What are the Insurance Requirements for Ohio Pawnbrokers?

Ohio does not require pawnbrokers to purchase any additional insurance prior to obtaining a license. Pawnbrokers who do not maintain at least $75,000 in liquid assets must purchase and maintain a $50,000 surety bond when renewing their license.

How Do Ohio Pawnbrokers File Their Bonds?

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

77 S. High Street, 21st Floor
Columbus, OH  43215

The surety bond requires signatures from both the surety company, including witness signatures, that issues the bond and from the broker. The surety company should include the following information on the bond form:

• Legal name, address, and county of the entity/individual(s) buying the bond
• Surety company’s name, address, and county
• Date the bond is signed and goes into effect
• Pawnbroker’s license number

What Can Ohio Pawnbrokers do to Avoid Claims Against Their Bonds?

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

• Do not engage in any acts of fraud or misrepresentation
• Faithfully honor all consumer contracts
• Maintain all required transaction records
• Return all pledged goods that have been paid for
• Obtain proof of identification during each transaction

What Other Insurance Products Can Agents Offer Pawnbrokers in Ohio?

Most reputable businesses will purchase liability insurance. 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 Ohio Pawnbroker Customers?

Ohio conveniently provides a database of actively licensed pawnbrokers operating in the state. Contact BondExchange for additional marketing resources. Agents can also leverage our print-mail relationships for discounted mailing services.