Sec. 413. (1) A person engaged in making small loans under this chapter shall post a bond to the department in the amount of fifty thousand dollars ($50,000) for each location where small loans will be made, up to a maximum bond in an amount determined by the director.

     (2) A surety bond issued under this section must:

(a) provide coverage for a lender engaged in making small loans under this chapter in an amount as prescribed in subsection (1);

(b) be in a form prescribed by the director;

(c) be in effect during the term of the lender’s license under this chapter;

(d) subject to subsection (3), remain in effect during the two (2) years after the lender’s license under this chapter is surrendered or terminated;

(e) be payable to the department for the benefit of:

(i) the state; and

(ii) individuals who reside in Indiana when they agree to receive financial services from the lender;

(f) be issued by a bonding, surety, or insurance company authorized to do business in Indiana and rated at least “A-” by at least one (1) nationally recognized investment rating service; and

(g) have payment conditioned upon the lender’s or any of the lender’s employees’ or agents’ noncompliance with or violation of this article or other applicable federal or state laws or regulations.

     (3) The director may adopt rules or guidance documents with respect to the requirements for a surety bond as necessary to accomplish the purposes of this chapter. Upon written request from a lender, the director may, at the discretion of the director, waive or shorten the two (2) year period set forth in subsection (2)(d) during which a surety bond required by this section must remain in effect after the lender’s license under this chapter is surrendered or terminated.

     (4) If the principal amount of a surety bond required under this section is reduced by payment of a claim or judgment, the lender for whom the bond is issued shall immediately notify the director of the reduction and, not later than thirty (30) days after notice by the director, file a new or an additional surety bond in an amount set by the director. The amount of the new or additional bond set by the director must be at least the amount of the bond before payment of the claim or judgment.

     (5) If for any reason a surety terminates a bond issued under this section, the lender shall immediately notify the department and file a new surety bond in an amount as prescribed in subsection (1).

     (6) Cancellation of a surety bond issued under this section does not affect any liability incurred or accrued during the period when the surety bond was in effect.

     (7) The director may obtain satisfaction from a surety bond issued under this section if the director incurs expenses, issues a final order, or recovers a final judgment under this chapter.

     (8) Notices required under this section must be in writing and delivered by certified mail, return receipt requested and postage prepaid, or by overnight delivery using a nationally recognized carrier.

As added by P.L.38-2002, SEC.1. Amended by P.L.258-2003, SEC.3; P.L.35-2010, SEC.87; P.L.216-2013, SEC.14; P.L.129-2020, SEC.8.