License & Permit
Motor Vehicle Dealer Bond
A motor vehicle dealer bond is a surety bond new and used car dealers must post to get and keep a state dealer license.
- Required by
- State dealer licensing agencies (Alabama Department of Revenue; Florida Department of Highway Safety and Motor Vehicles)
- Bond amount
- Set by whoever requires the bond. We confirm it.
What this bond guarantees
The bond promises that the dealer will follow state motor vehicle and title laws and honor its sales contracts. The state is the obligee, for the benefit of customers and others who suffer a loss. Claims arise from problems such as failing to deliver a title, misrepresentation, or unpaid sales tax on vehicle sales.
Who needs it
- New car dealers
- Used car dealers
- Wholesale dealers and dealer auctions (in many states)
What the underwriter looks at
- Personal credit of the owners
- Dealer experience
- Prior bond claims or license discipline
Requirements vary by state and by who asks for the bond. Send us the request you received and we will confirm exactly what it calls for.
Common questions
How much bond does a dealer need in Alabama and Florida?
Alabama requires a continuous $50,000 bond under Code of Alabama 40-12-398, and that bond also covers the dealer's designated agent requirement. Florida requires $25,000 under section 320.27, delivered each year before the license issues.
Can a customer collect on my bond directly?
In Alabama, a claimant must first get a final court judgment and try to collect it, then file with the Department of Revenue, which makes the claim on the surety. In Florida, the bond runs to the state for any person who suffers a loss from a violation.