Alabama Motor Vehicle Dealer Surety Bonds – Fast, Quotes
What is Motor Vehicle Dealer Bond? (What does the Surety Bond cover?)
When reviewing your state’s licensing department’s requirements to receive your Motor Vehicle Dealer License, you may see a Surety Bond on the list. The Surety Bond requirement is to enforce dealers to follow state rules and regulations and prevent them from engaging in unethical business practices.
How does the surety bond work?
First, let’s make it clear the Surety Bond does not serve the same purpose as traditional insurance. You are not covered under the bond. However, the customers who purchase vehicles from your dealership are covered.
A Motor Vehicle Dealer Bond is a mix of insurance and a line-of-credit. This bond is a contract between you and two other parties.
The Principal – You, the licensed dealer, are listed as the principal on the bond.
The Obligee – The licensing board requiring you to get a Surety Bond.
The Surety – This is the company through which you choose to purchase your bond.
If your customer files a complaint against your business, they may choose to make a claim against your surety bond. The surety company will payout up to the full bond amount to the claimant if they find the claim to be valid.
What happens if a claim is made on my Motor Vehicle Dealer Surety Bond?
Both you and the surety don’t expect to have a claim filed against the bond. This is why the premium is significantly less than the necessary bond amount. That being said, claims do happen.
In the event your customer files a claim against your bond, your surety company will perform a thorough investigation on the claim. After the investigation concludes, the surety company will payout to the claimant up to the full bond amount if they find the claim to be valid. However, as the principal of the bond, you are responsible for making the surety financially whole by paying them back in full.
How much does the surety bond cost?
Among the factors used to determine the cost of your bond, the surety reviews the amount of the bond, the credit score of all the owners and the length of the bond term. The greater the risk associated with your policy, the higher you can expect to pay in premium. However, many of our surety partners offer Motor Vehicle Dealer Bonds starting as low as $350.00.
Can I get a Motor Vehicle Dealer License Surety Bond with bad credit?
Having bad credit doesn’t automatically exclude you from being eligible for a Surety Bond. In fact, we’ve assisted many dealers with non-standard credit get their Motor Vehicle Dealer License Bonds. Due to the higher risk, applicants with non-standard credit typically get quotes within 5%-15% of the bond amount they require, when approved.
We perform a soft-pull when running credit, so your score will not adversely be affected when checked. See what you’ll pay for your bond using the button below.