How to Obtain an Auto Auction License in Florida

Oct 16 Posted on

What Is a Florida Auto Auction License and Who Needs One?

Anyone who wants to sell motor vehicles at auction in the state of Florida needs to be properly licensed by the Department of Highway Safety and Motor Vehicles. While there are six different types of motor vehicle dealer licenses in Florida, only the following licenses allow a dealer to sell through an auction process:

  • License Type VW�allows the dealer to buy and sell wholesale with other dealers or through auctions
  • License Type VA�is specifically for dealers who buy and sell cars at auction, but not on a retail basis

What Does the Licensing Process Involve?

Obtaining an auto auction license is not the first step in the process of becoming a legally licensed motor vehicle auctioneer in the state of Florida�it�s the last. There are a number of requirements that must be met before submitting an application for an auto auction license. These include:

  • Successful completion of a state-approved Florida dealer license class
  • Proof of ownership or rental of an office approved by the Division of Motorists Services Compliance Examiner
  • Business registration with the Florida Secretary of State, Division of Corporations
  • A Federal Employer Identification number issued by the IRS
  • A Sales tax number issued by the Florida Department of Revenue
  • Proof of garage liability insurance (single-limit liability coverage of $25,000 and personal injury protection coverage of $10,000)
  • Forms related to the structure of the business (e.g., Articles of Incorporation, Partnership Agreement, etc.)
  • Fingerprinting fee (currently $54.25 per person)
  • $25,000 Auto Auction surety bond
  • Completed Florida Dealer License Application and application fee (currently $300 per main business location)

Bear in mind that all Florida auto dealer licenses expire on April 30 each year, regardless of the month of issue. To renew your license, you will need to show proof of having completed eight hours of continuing education and pay a renewal fee (currently $75).

Why is a Surety Bond Required?

The surety bond is an auction dealer�s guarantee to conduct business in accordance with all applicable state laws and industry standards as specified in the terms and conditions of the bond agreement. Thus, the bond protects consumers from financial loss resulting from the unlawful or unethical conduct of an auto auctioneer. The $25,000 bond amount, referred to as the �penal amount� of the bond, is the maximum amount available to pay a given claim against the bond.

What Happens When a Claim is Filed?

Upon receipt of a claim, the surety company will investigate to make sure that it is valid and will then typically pay the claim on behalf of the auction dealer. However, every surety bond agreement includes an indemnification clause that holds the surety company harmless, so the auction dealer is legally obligated to repay the surety company. Essentially, the surety company is advancing money to the dealer, but that advance must be paid back.

How Much Does an Auto Auction Bond Cost?

The primary factor in determining the cost of any surety bond is the bond applicant�s personal credit score. If your credit is good, you will pay as little as 1% to 3% of the $25,000 bond amount. If your credit is poor, you could pay a higher rate.

Get Bonded Today

At Single Source Insurance, we�re here to help you navigate your way through the licensing process and get you the surety bond you need to become a Florida-licensed auto auction dealer.

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How to Obtain an Auction License in Mississippi

Oct 16 Posted on

What is Needed to Sell Cars at Auction in Mississippi?

Mississippi does not require special licenses for auto auction dealers. Anyone with a used car dealer�s license is permitted to sell motor vehicles at auction.

What Does the Dealer Licensing Process Involve?

There are a number of things you�ll need to do before submitting an application for a motor vehicle dealer license in Mississippi. These include:

  • Establish an approved business location in the state of Mississippi.
  • Complete an 8-hour pre-licensing course available on the Mississippi Independent Auto Dealers Association website and obtain a Certificate of Course Completion.
  • Obtain a Federal Employer Identification number issued by the IRS.
  • Register your business with the Mississippi Secretary of State.
  • Obtain a sales tax number from the Mississippi Department of Revenue.
  • Purchase a blanket liability insurance policy that covers all vehicles.
  • Purchase a $15,000 motor vehicle dealer surety bond. (For new car dealers, the bond must be in the amount of $25,000, and dealers with multiple locations can purchase one $100,000 bond to cover all of them).

Once you have completed all of these tasks, you can complete the Dealer License Application packet available from the Department of Revenue website. You can complete the application form online, but you will then need to print the entire packet, fill out the other documents, and submit everything, including the Certificate of Course Completion, surety bond, proof of liability insurance, and permit and tag fees to the Motor Vehicle Licensing Bureau (P.O. Box 1140, Jackson, MS 39215).

Why Is a Surety Bond Required?

The surety bond requirement protects the public against financial losses stemming from the unlawful or unethical actions of a licensed auto dealer. The bond is a dealer�s pledge to operate in compliance with all applicable rules and regulations and to compensate anyone who suffers a financial loss due to the dealer�s violation of the terms and conditions of the surety bond contract.

What Happens When a Claim is Filed?

Any party who loses money because of a dealer�s fraud or negligence can file a claim against the bond. When that happens, the surety company that issued the bond will investigate the matter to ensure that the claim is valid.

The surety company typically will pay any valid claim up front and then collect reimbursement from the dealer. Every surety bond contract indemnifies the surety company and places the legal responsibility for paying claims squarely on the dealer�s shoulders.

How Much Does an Auto Dealer Bond Cost?

The annual premium for an auto dealer bond is calculated as a small percentage of the $15,000 required bond amount. The surety company determines what the percentage will be based on the dealer�s credit score and finances. Applicants with good credit usually pay a premium rate of from 1% to 3%, or $150 to $450 per year. Those with poor credit may be assigned a higher premium rate.

Get Bonded Today

At Single Source Insurance, we�re here to help you get the auto dealer bond you�ll need to become licensed as a used car dealer in Mississippi and sell cars at auction.

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How to Get a Freight Broker License

Oct 16 Posted on

What Is a Freight Broker License and Who Needs One?

Freight brokers are the middlemen between businesses that need to move goods from one location to another and the carriers that do the actual moving. They are experts in the legalities of moving cargo and provide vital services such as obtaining good shipping rates and delivery dates for shippers, helping carriers optimize their loads and routes, and tracking the movement of goods from departure to receipt at the intended destination.

To perform these important services, freight brokers must be licensed by the Federal Motor Carrier Safety Administration (FMCSA). A freight broker�s license is also referred to as a Motor Carrier Operating Authority, or MC Authority. The proof of this license or authority is the MC number that is issued upon approval of a freight broker�s license.

What Does the Licensing Process Involve?

Of course, becoming a freight broker involves certain professional preparation in advance of applying for a license, such as acquiring the necessary knowledge through a freight broker school or training program, setting up a business entity (e.g., sole proprietorship, LLC, corporation, etc.), and registering to do business in your state and/or municipality.

The actual licensing process involves these key steps:

  1. Obtain a US Department of Transportation (USDOT) number by registering on the FMCSA website. You will need to enter your USDOT number on your application for a freight broker license.
  2. Complete the freight broker license application form, OP-1, which you will also find on the FMCSA website, and pay the application fee (currently $300). You will also need to submit the required $75,000 freight broker surety bond, also known as a BMC-84 bond.
  3. Wait for your MC (Motor Carrier) number to arrive in the mail in roughly six to eight weeks. It will be posted on the FMCSA�s Register page when it is issued, and there is a 10-day period during which anyone who has reason to protest your licensing can do so. At the end of that 10-day period, you are granted your freight broker license�your MC Authority�evidenced by your MC number.

Why is a Freight Broker Bond Required?

A freight broker bond is a freight broker’s guarantee to abide by all applicable rules and regulations and uphold the standards of the freight brokerage industry. It provides protection for your customers against financial loss due to any unethical or unlawful activities on your part.

How Does the Bond Work?

Any party that suffers a financial loss because you have violated the surety bond contract has the right to file a claim against your bond. The surety company that issued the bond will investigate to ensure the validity of the claim before paying it. That payment will give you some time to come up with the funds to cover the claim amount and reimburse the surety company. An indemnification clause in the surety bond contract ensures that the surety company is held harmless and that you, as the bonded individual, are legally responsible for paying claims.

How Much Does a Freight Broker Bond Cost?

You will pay only a small percentage of the $75,000 bond amount as your annual premium for the bond. That percentage is determine by the surety company based on your personal credit score and your personal and business finances. If your credit is good (700 or above), you will be assigned a premium rate of as little as 1%. Applicants with lower credit scores will pay more.

Get The Bond You Need

Request a quote today for the surety bond you need to obtain your federal license as a freight broker. Our knowledgeable agents are ready to answer any questions you may have.

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How to Become a Mortgage Broker in Washington State

Oct 16 Posted on

What Types of Broker Licenses Are Issued in Washington?

To originate and broker residential mortgage loans legally in the state of Washington, a company or individual must be licensed by the Department of Financial Institutions (DFI). Being properly licensed allows a mortgage broker to originate and broker residential mortgages for residents of Washington and for properties located within the state. If you will be operating a mortgage brokerage company out of more than one location in Washington, each branch must have its own license.

What Does the Licensing Process Involve?

Submitting a license application is not the first step in the process. Before applying, you must first register the business with the Washington Secretary of State, unless you operate as a sole proprietor. You must also obtain a business license from the Washington Business Licenses Services office.

DFI regulates and supervises mortgage broker licenses, but license applications are submitted, processed, and issued through the National Mortgage Licensing System (NMLS). However, certain documents may need to be mailed or e-mailed directly to DFI rather than uploaded into NMLS.

The NMLS website lists all of the items that must be submitted in order for an application to be considered complete, such as a business plan, management chart, and electronic surety bond. A separate application is required for the Designated Broker you will need to appoint. The specific requirements for licensing as a Designated Broker include passing Washington�s Designated Broker Test.

No processing will occur until all items have been submitted. Note that if all documents have not been submitted within five business days of the company�s license application submission, your application could get kicked from the system.

Why Is a Surety Bond Required?

Many state agencies that issue business licenses of one sort or another require a surety bond as a way of protecting consumers from a financial loss due to a licensee�s fraudulent business practices or unethical conduct. Such bonds are typically referred to as �license� or �license and permit� bonds. A Washington Mortgage Broker bond serves as the business owner’s guarantee to carry out its loan brokering and origination activities in accordance with all applicable state laws. Violating any of the terms of the bond can result in claims against the bond.

What Happens if a Claim is Filed?

Upon receipt of a claim against a Mortgage Broker�s bond, the surety company will first investigate to make sure that it is valid. Often, the surety company will go ahead and pay a valid claim on behalf of the mortgage broker and then collect reimbursement from the broker.

This ensures that claims are paid in a timely manner, but it does not mean that the surety company is permanently saddled with the financial burden of paying claims. The terms of a surety bond contract nearly always indemnify the surety company and make the bonded individual solely responsible for covering the cost of claims.

What Does a Mortgage Broker Bond Cost?

Mortgage Broker bond applicants pay a percentage of the required bond amount as the annual premium for the bond. The required bond amount is established by DFI as $20,000 for a new company with no prior sales history. After the first year, the required bond amount is determined based on the previous year�s loan volume�$40,000 for a loan volume between $20 million and $40 million, and $60,000 for a loan volume over $40 million.

The bond premium rate you will pay, however, is typically 1% to 3% of the total bond amount for applicants with good credit. Those with poor credit may pay a higher premium rate.

Get The Bond You Need

When you�re ready to apply for a Washington Mortgage Broker license, we�re here to help you get the surety bond you�ll need. Apply online today!

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How to Obtain a Car Auction License in Washington

Oct 1 Posted on

What Type of License is Required?

Not all states require auto auctioneers to be licensed as auto dealers, but Washington is one of the states that does.

In the state of Washington, auctioneers are considered to be a type of vehicle broker, which requires a Class D auto dealer license. Auto auctioneers do not have any title to or interest in the vehicles they sell, and it is illegal to sell any car that is not registered to you without a dealer license.

Is There a Bonding Requirement?

In states that require auto auctioneers to be licensed, purchasing an auto auction bond, also known as an auto auctioneer bond, is often part of the process. That�s why auction bonds are categorized as a type of license and permit surety bond.

Anyone who wants to auction new or used cars, trucks, or mobile homes in the state of Washington must first purchase a Washington auto auction bond as a prerequisite for licensing. To obtain a Class D auto dealer license, the applicant must purchase a $10,000 continuous auto auction surety bond and pay a $75 license fee to the state.

These bonds protect consumers from financial loss due to any unlawful or unethical actions on the part of a professional auctioneer. In purchasing the bond, an auctioneer is guaranteeing to abide by applicable state and local laws, refraining from such practices as misrepresenting the condition and value of vehicles being auctioned.

How Do Auto Auction Bonds Work?

There are three parties to every surety bond contract: the obligee, the principal, and the surety. For a Washington auto auction bond, the obligee (the party requiring the bond) is the state of Washington, Department of Revenue. The principal is the auctioneer or auction company applying for a Class D license. And the surety is the surety company that underwrites and issues the bond. The surety must be licensed to do business in Washington.

The terms and conditions of the surety bond contract specify what the principal must do (or not do) to avoid violations that could result in a claim on the bond. Anyone who experiences a financial loss due to the unlawful or unethical actions of the principal (such as substituting vehicles or misrepresenting them), can file a claim against the bond.

The surety will typically pay the claim, but only as an advance to give the principal time to gather the funds to cover the claim amount. The bond contract indemnifies the surety and requires the principal to reimburse the surety for any claims paid on behalf of the principal.

Secure Your Surety Bond Today and Start Your Licensing Journey

The principal will pay an annual premium that is a small percentage of the $10,000 bond amount. The surety establishes this percentage, or premium rate, on a case-by-case basis, taking into account the principal�s personal credit score, financial history, and industry experience.

Applicants with good credit typically pay between 1% and 3% of the bond amount, or as little as $100 for the $10,000 bond. Those with poor credit may pay a higher premium rate.

Get The Bond You Need

At Single Source Insurance, our experienced bond professionals know exactly how to get you the best possible rate on the surety bond you need to work as an auto auctioneer in Washington. Apply online today!

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How to Obtain a Car Auction License in Texas

Oct 1 Posted on

What Type of License is Required?

In Texas, there is no dedicated auto auction license. Auctioneering is treated the same way as any other form of sales activity from a dealer licensing standpoint.

Independent dealer�s licenses issued in Texas are referred to as GDN licenses. If you plan to auction used vehicles to wholesale dealers, you will need an Independent Wholesaler Dealer�s GDN license. If you will be selling to the public, you will need an Independent Motor Vehicle Dealer�s GDN License.

Is There a Bonding Requirement?

In either case, you will need to purchase a two-year surety bond in the amount of $25,000, but it is not specifically referred to as an auto auction bond.

Auto dealer bonds of any sort provide protection for the state and for consumers against financial loss stemming from the unlawful or unethical actions of a licensed motor vehicle dealer. Surety bonds play an important role in maintaining a fair and orderly motor vehicle marketplace. In purchasing a surety bond, a dealer is pledging to conduct business in accordance with all applicable laws and industry standards.

How Do They Work?

All surety bond agreements are legally binding contracts that involve three parties. In the case of a bond that will enable you to auction motor vehicles in Texas:

  • The obligee, the party that requires the bond, is the Texas Department of Transportation.
  • The principal, the party that must purchase the bond, is the dealer.
  • The surety is the company that underwrites and issues the bond.

If an auto auctioneer violates the terms of the bond�for example, by mishandling customers� funds, misrepresenting a vehicle, or failing to transmit sales tax payments to the state�consumers who suffer a financial loss can file a claim against the bond.

When a claim is filed by an injured party, the surety will first investigate to make sure that the claim is valid. Most often, the surety will pay valid claims in advance, on behalf of the principal, to give the principal a little breathing room to liquidate assets if necessary and gather the necessary funds to cover the claim. The principal must then reimburse the surety, who is indemnified by a clause in the surety bond contract, which makes the principal solely responsible for the cost of claims against the bond.

Secure Your Surety Bond Today and Start Your Licensing Journey

The Texas Department of Transportation, as the bond�s obligee, has established the required bond amount as $25,000. This covers the principal for the two-year period before the license must be renewed. The premium the principal will pay for the bond, however, is a small percentage of that amount. The surety will set a premium rate for each bond applicant based primarily on the applicant�s personal credit score.

Bond applicants with good credit will usually pay a premium rate that is between 1% and 3% of the bond amount. However, because of the greater risk the surety is assuming, applicants with poor credit may pay a higher premium rate.

Get The Bond You Need

At Single Source Insurance, our experienced surety bond professionals will get you the best possible deal on the bond you need to begin auctioning vehicles in Texas.

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How to Obtain a Car Auction License in California

Oct 1 Posted on

Is a License Required?

California does require vehicle auctioneers and auction companies to be licensed in order to operate legally within its borders.

Is There a Bonding Requirement?

One of the requirements for obtaining an auctioneer license from the California Secretary of State is posting an auctioneer surety bond, also referred to as an auto auction bond.

Anyone who plans to auction new or used vehicles in the state of California must purchase a $20,000 California auctioneer bond as an essential step in the license application process.

This bond protects the state and an auctioneer�s customers, not the auctioneer. The bond is an auctioneer�s guarantee to comply with the California Civil Code and relevant ethical standards. Any infraction can result in a claim filed against the bond by a party who has suffered a financial loss as a result of that infraction.

How Do Auctioneer Bonds Work?

Every surety bond agreement is a legally binding contract that brings together three parties:

  • The obligee, the party requiring the bond, is the California Secretary of State.
  • The principal, the party required to purchase the bond, is the auctioneer or auction company.
  • The surety is the California-licensed surety bond company that underwrites and issues the bond.

Some of the more common violations committed by auto auctioneers include:

  • Failing to account for payments from customers
  • Mishandling of funds
  • False or misleading advertising
  • Misrepresentation of vehicles up for auction

There are plenty of other ways in which an auctioneer or auction company can cause consumers to suffer a financial loss through unethical or fraudulent business practices.

Any violation of the terms and conditions of an auto auctioneer bond can result in a claim being filed against the bond by the injured party. In most cases, the surety will pay a valid claim, then collect reimbursement from the principal. In effect, the surety makes a short-term loan to the principal, which must be repaid. The principal is ultimately responsible for paying claims or reimbursing the surety.

Secure Your Surety Bond Today and Start Your Licensing Journey

The state of California has established the required bond amount as $20,000. But the principal pays an annual premium that is only a small percentage of that amount. The primary factor the surety considers in setting the premium rate for a given bond applicant is the applicant�s personal credit score, though the individual�s financial history and industry experience can also enter into the picture.

The premium rate for applicants with good credit is between 1% and 3% of the bond amount, or as little as $200 for the $20,000 bond. Those with poor credit may pay a higher premium rate to compensate for the higher risk to the surety.

Get The Bond You Need

Apply online with Single Source Insurance today for the auto auctioneer bond you need to obtain or renew your auctioneer.

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How to Obtain an Auction License in Louisiana

Oct 1 Posted on

Is a Dealer�s License Required?

The Louisiana Used Motor Vehicle Commission (LUMVC) licenses and regulates participants in the state�s used motor vehicle industry, including auction dealers who broker and sell used cars to the public, to wholesale dealers, or for salvage.

Is There a Bonding Requirement?

One mandatory step in becoming licensed to auction used cars in Louisiana is to purchase a surety bond in the amount of $50,000 from a surety company licensed to issue bonds in Louisiana.

Auto auction bonds protect the state and consumers from financial loss attributable to the unlawful or unethical actions of a used car auctioneer. For example, claims can be filed against a bond to cover a loss to the LUMVC resulting from nonpayment of taxes or license fees, or loss, damage, or expenses incurred by car buyers due to an auctioneer�s failure to deliver a certificate of title or to remit to LUMVC taxes or registration fees paid by the buyer.

Unlike insurance, which protects the policyholder against financial loss, auto auction bonds provide protection for those who are harmed financially by the bonded auction dealer.

How Do Auto Auction Bonds Work?

All surety bond agreements bring together three parties in a legally binding contract, specifying the legal rights and responsibilities of each party. In the case of an auto auction bond, these parties are:

  • The obligee requiring the purchase of the bond (LUMVC)
  • The principal purchasing the bond (the auctioneer or auction company)
  • The surety underwriting and issuing the bond (the Louisiana-licensed surety bond company)

The terms of the bond specify the laws, regulations, and industry standards the principal must abide by to avoid claims being filed against the bond. When a violation occurs and a claim is filed, the surety will investigate to ensure that the claim is legitimate.

While the principal is legally responsible for paying all valid claims, the surety typically will pay a claim in advance to give the principal time to liquidate assets if necessary. The indemnification clause included in all surety bond contracts requires the principal to reimburse the surety for all claims payments made on the principal�s behalf so that the surety is held �harmless.�

The bond must remain in force and be renewed annually to prevent suspension or revocation of the auction dealer�s license.

Secure Your Surety Bond Today and Start Your Licensing Journey

Like insurance policies, surety bonds are purchased by paying a premium to the issuing company. The annual premium for an auction bond is a small percentage of the $50,000 required bond amount (also referred to as the bond�s penal amount). While the obligee establishes the bond amount, the surety sets the premium rate on a case-by-case basis, based largely on each applicant�s personal credit score.

Applicants with good credit usually pay the standard market rate of between 1% and 3% of the $50,000 required bond amount, or $500 to $1,500 per year. Applicants with poor credit may still be able to get bonded, but will likely pay a higher premium rate.

Get Bonded Today

Request an online quote from Single Source Insurance today, or give us a call to discuss your auto auction bonding needs.

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