SURETY BONDING FOR AUTO DEALERS

By: Aaron Sorenson, Thu May 20th, 2010

Bonding agencies issue surety bonds for consumer protection to an endless list of professions. Most of us are familiar with contractor/construction bonds, including bid and payment bonds. There are, however, other working professionals who require bonding, for example: general service bonds, taking in some healthcare workers, security patrols, and telemarketers; public official; and legal and court bonds. A bond is a guarantee to the job owner/client assuring that work will be done in an appropriately legal and satisfactory manner.

Unlike insurance, surety bonds do not compensate the bond holder; actually surety bonds protect the contractee from financial loss if contractual agreements are not met. License bonds are a guarantee that the professional or principal, the person with whom one contracts, will perform within the provisions of codes and laws applicable to the activity. Bonding requirements vary from state and, within each state, job to job. Premiums for different bonds differ as well. Factors include state regulations, the credit rating of the principle, personal and business financial rating, and the financial scope of a job. Typically, the cost is a small fraction of the total contract. With the increase of insolvency of many small and large businesses, surety bonding companies are strengthening guidelines for issuing bonds. There are some programs that offer special consideration for higher risk companies with a bad credit record. The Small Business Association is partnering with surety companies to help with those struggling with the downturned economy and to decrease losses to bond issuing agencies.

One example of license bonding is a car dealer bond, DMV bond, or motor vehicle dealer bond. MVD bonds extend to dealers and manufactures of new and used autos, motorcycles, trailers, and boats. California, for example, requires dealers to post a $50,000 bond to the state. Once again, this amount will vary depending on the state where auto dealer bond is issued. Premiums are paid annually. Additionally, the bonding company will investigate all claims against the principle for legitimacy.

Surety 1, Surety Solutions Insurance Services, Inc. has many markets available to auto dealers and is ready to take online applications. Surety 1 is backed by an experiences staff to answer questions and concerns through an online chat or one-on-one telephone help. Surety Solutions issues Car Dealer Bonds for all 50 states. Applicants can expect approval time to vary for each individual. With Surety 1, customers are always assured of competitive rates and friendly service.

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SURETY BONDING FOR AUTO DEALERS

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