Kentucky Check Casher Bond: A Comprehensive Guide

May 18, 2021

This guide provides information for insurance agents to help check cashers obtain Kentucky Check Casher Bonds

At a Glance:

• Average Cost: Between 1.5% to 7.5% of the bond amount per year based on the applicant’s credit
• Bond Amount: Based on the number of licensed locations:

Table 1.1

• Who Needs it: All individuals and business entities seeking to obtain a Check Casher License in Kentucky
• Purpose: To ensure the public will receive compensation for any damages should the check casher fail to comply with licensing law
• Who Regulates Check Cashers in Kentucky: The Kentucky Department of Financial Institutions

Background

Kentucky statute 286.9-020 requires all check cashers operating in the state to obtain a license with the Department of Financial Institutions. The Kentucky legislature enacted the licensing laws and regulations to ensure that check cashers engage in ethical business practices. In order to provide financial security for the enforcement of the licensing law, check cashers must purchase and maintain a surety bond to be eligible for licensure.

What is the Purpose of the Kentucky Check Casher Bond?

Kentucky requires check cashers to purchase a surety bond as part of the application process to obtain a business license. The bond ensures that the public will receive compensation for financial harm if the check casher fails to comply with the licensing regulations set forth in Kentucky statute 286.9. Specifically, the bond protects the public in the event the check casher engages in any acts of fraud or fails to pay all money owed to consumers. In short, the bond is a type of insurance that protects the public if the check casher breaks licensing laws.

How Can an Insurance Agent Obtain a Kentucky Check Casher Surety Bond?

BondExchange makes obtaining a Kentucky Check Casher Bond easy. Simply login to your account and use our keyword search to find the “check” 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.

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.

Is a Credit Check Required for the Kentucky Check Casher Bond?

Surety companies will run a credit check on the owners of the check cashing company to determine eligibility and pricing for the Kentucky Check Casher bond. Owner’s with excellent credit and work experience can expect to receive the best rates. Owners 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 owner’s credit.

How Much Does the Kentucky Check Casher Bond Cost?

The Kentucky Check Casher surety bond can cost anywhere between 1.5% to 7.5% of the bond amount 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 a $50,000 bond requirement.

$50,000 Check Casher Bond Cost

Table 1.2

*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.

How Does Kentucky Define “Check Casher?”

Kentucky statute 286.9-010 defines a check casher as any business entity who accepts checks in exchange for money or any form of stored value.

How do Check Cashers Apply for a License in Kentucky?

Check cashers in Kentucky must navigate several steps to secure their license. Below are the general guidelines, but applicants should refer to the NMLS’s application guidelines for details on the process.

License Period – The Kentucky Check Casher License expires on June 20 of each year and must be renewed before the expiration date

Step 1 – Purchase a Surety Bond

Check cashers must purchase and maintain a surety bond to be eligible for licensure (limits outlined in Table 1.1)

Step 2 – Request a NMLS Account

The Kentucky Check Casher License application is submitted electronically through the Nationwide Multistate Licensing System (NMLS). To submit a license application, applicants must first request to obtain an NMLS account.

Step 3 – Complete the Application

All Kentucky Check Casher License applications can be completed online through the NMLS. Applicants must complete the entire application, and submit the following items:

• • Audited company financial statements prepared by a CPA
  • Primary company, consumer complaint, and exam delivery contact information
  • Certificate of Good Standing obtained from the Kentucky Secretary of State
  • Company formation documents
  • Management chart indicating the company’s hierarchy
  • Organizational chart indicating the company’s ownership structure
  • Personal financial statements for all individuals who own 5% or more of the company
  • Detailed resume containing relevant experience

Check cashers must pay the following fees when submitting their license application:

• • $500 licensing fee
  • $15 credit report fee (per person)

*Corporate offices that are not subject to licensing requirements must submit a separate registration for each office

How Do Kentucky Check Cashers Renew Their License?

Check cashers can renew their license online through the NMLS. License holders need to simply login to their account to access their renewal application. The Kentucky Check Casher License expires on June 20 of each year and must be renewed before the expiration date.

What Are the Insurance Requirements for the Kentucky Check Casher License?

The State of Kentucky does not require check cashers to obtain any form of liability insurance as a prerequisite to obtaining a business license. Check cashers must purchase and maintain a surety bond to be eligible for licensure (limits outlined in Table 1.1).

How Do Kentucky Check Cashers File Their Bond?

Check cashers should submit the completed bond form, including the power of attorney, electronically through the NMLS. The surety bond requires signatures from both the surety company that issues the bond and a representative from the check cashing company. The surety company should include the following information on the bond form:

• Legal name and address of entity/individual(s) buying the bond
• Surety company’s name
• Bond amount
• Date the bond is signed

What Can Kentucky Check Cashers Do to Avoid Claims Against Their Bond?

To avoid claims on their bond, check cashers in Kentucky must follow all license regulations in the state, including some of the most important issues below that tend to cause claims:

• Do not engage in any acts of fraud
• Pay all money owed to consumers
• Pay all required taxes and fees

What Other Insurance Products Can Agents Offer Check Cashers in Kentucky?

Kentucky does not require check cashers to purchase any form of liability insurance as a prerequisite to obtaining a license. However, most reputable businesses will seek to obtain this insurance anyway. Bonds are our only business at BondExchange, so we do not issue liability 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 Check Casher Customers?

The NMLS conveniently provides a public database to search for active check cashers in Kentucky. The database can be accessed here. Contact BondExchange for additional marketing resources. Agents can also leverage our print-mail relationships for discounted mailing services.