(a) No license shall be issued by the Department of Finance and Administration until the applicant has filed with each application the following insurance policies and bonds issued by an insurance company or bonding company authorized to do business within this state, which have been approved by the department:
(1) A bond in the penal sum of five hundred dollars ($500) in a form as may be prescribed by the department, conditioned to pay any license fees and taxes, and penalties and interest thereon, due this state or any governmental subdivision thereof by reason of the failure of the itinerant merchant to pay any such license fees and taxes;
(2) A bond in the penal sum of one thousand dollars ($1,000) in a form as may be prescribed by the department:
(A) For the purpose of protecting the public against fraud, conditioned upon the delivery of honest weights, measures, footage, or grades if the commodities handled by the itinerant merchant are those customarily sold by weights, measures, footage, or grades, accurate representation as to quality or class of the commodities, the actual payment of checks, drafts, or other obligations delivered by the itinerant merchant in exchange for the purchase of commodities; and
(B) Conditioned to pay any judgment or judgments that may be obtained against the itinerant merchant for civil liability arising out of the conduct of his or her business, including the matters specified in subdivision (a)(2)(A) of this section, but not including any causes of action covered by the insurance policies described in subdivision (a)(3) of this section. The bond shall further provide that any person dealing with the itinerant merchant, any person using the commodities handled by him or her, and any person holding checks, drafts, or other obligations shall have cause of action upon the bond by reason of any violation of the terms of the bond with respect to the dealing, the commodities, checks, drafts, or other obligations; and
(3) A liability insurance policy or bond which shall bind the obligors to pay compensation for injuries to persons and damage to property resulting from the negligent operation of the motor vehicle operated under authority of the itinerant merchant's license, the policy or bond to be conditioned to pay any sum up to five thousand dollars ($5,000) for personal injury to or death of one (1) individual, up to ten thousand dollars ($10,000) for personal injuries or deaths resulting from any single accident, and up to one thousand dollars ($1,000) for damage to property in any single accident.
(b)
(1) Every insurance policy and bond filed with the department under the provisions of this subchapter shall contain an endorsement or provision that they shall not be canceled by the obligor, shall not expire, and shall not become reduced in amount until fifteen (15) days after notice by registered United States mail has been sent to the department of the intention to cancel them, or that they are to expire or are to be reduced in amount.
(2) Upon receipt of such a notice, the department shall immediately notify the itinerant merchant by registered United States mail, return receipt requested, of the receipt of the notice and shall advise him or her that unless a new insurance policy or bond is filed to replace the one to be canceled, to expire, or to be reduced in amount, before the time the cancellation, expiration, or reduction becomes effective, the license of the itinerant merchant in connection with which the policy or bond was issued shall be revoked at the time the cancellation, expiration, or reduction becomes effective.
(3) If a new policy or bond is not filed or the amount of reduction restored before the time the cancellation, expiration, or reduction becomes effective, the department must revoke the license at that time, and the licensee shall return the license and license plate to the department.