What does the bond do?
A dealer bond provides a financial guarantee tied to the obligations in the bond and state law. It may protect eligible consumers or other parties from specified dealer violations. It does not insure your inventory against hail or theft and does not replace liability insurance.
The required amount depends on the state and license category. Retail dealers, wholesalers, brokers, issuing agents and specialty dealers may have different rules. Some states also accept another form of financial security.
Bond amount versus bond premium
The face amount is the guarantee required by the state. The premium is the amount charged to issue that guarantee for the stated term. A $50,000 bond does not mean the dealer automatically pays $50,000 to buy it.
Pricing may depend on the required amount, bond term, business and ownership information, financial condition, credit and underwriting. Ask whether the quoted premium covers one year, two years or another period, and whether fees or collateral apply.
A paid claim may have to be repaid
Unlike many ordinary insurance claims, a surety payment can create a reimbursement obligation under the indemnity agreement. Read what you and the business are agreeing to repay before signing.
Report claims and notices promptly. Buying a bond is not permission to ignore title, tax, advertising or other dealer obligations. Keep the records required for the transactions you handle.
Add a bond quote to your application
You can add a dealer bond quote to the dealer insurance application. One application lets you request both. The bond and insurance are priced separately.
Get the paperwork right
Match the legal business name, DBA where required, location, license category and effective dates. Use the state’s current form and include signatures or power of attorney when requested. A correct amount on the wrong form can still delay an application.
Review renewals early and disclose ownership or location changes. Use your licensing authority’s current bond form and filing instructions.