Blog Posts Categorized: Auto Dealer Bonds - Page 2

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.

Understanding the Costs of Auto Dealer Bonds: A Comprehensive Guide

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.

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.

What Do They Cost?

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.

Understanding the Costs of Auto Dealer Bonds: A Comprehensive Guide

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

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.

What Do They Cost?

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.

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.

What Do They Cost?

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!

What Is a Bonded Title?

A bonded title is pretty much what it sounds like�a title with a bond attached. A bonded title is issued when a person has obtained ownership of a vehicle but for some reason lacks a valid title that will allow that vehicle to be transferred into the new owner�s name and registered. It looks just like a regular title except for bearing the word �BONDED.�

The California title bond itself serves as a guarantee that neither the state of California nor anyone with a prior ownership interest in the vehicle will suffer a financial loss if it turns out that you were given a bonded title that you were not entitled to.

Who Needs a Bonded Title?

Anyone who was not given a title at the time the vehicle was purchased, was given a title and lost it before getting it transferred into their own name, or received a defective title can apply for a bonded title. Simply losing a title that was already in your name doesn�t require a bonded title�only a duplicate title, which is much easier to obtain.

How Does the Process Work?

Here are the steps for obtaining a bonded title in California:

• Fill out a Bonded Title Application, which is available on the California DMV website or from your local DMV office.
• Ask a DMV employee or law enforcement office to complete a Verification of Vehicle form, which confirms the VIN.
• Fill out a Statement of Facts form, also available from the DMV. You�ll need to include certain information about the vehicle, how you came to own it, and why you don�t have the original title.
• For a vehicle weighing 10,000 pounds or less, fill out a Weight Certificate. For a vehicle weighing more than that, a completed Declaration of Gross Weight/Combined Gross Vehicle Weight Form.
• Have a DMV representative inspect the vehicle and fill out an inspection form that verifies the VIN.
• If the vehicle is not going to be operated, fill out a Certificate of Non-Operation/Planned Non-Operation.
• If the vehicle is less than ten years old, complete an Odometer Disclosure statement.
• Have a California licensed auto dealer appraise the vehicle and determine its fair market value. You may also use Kelley Blue Book or another valuation guide to find its current value.
• Purchase a three-year California Certificate of Title Bond for the amount of the vehicle’s appraised value from a surety company licensed to operate in California.
• Submit the bond certificate and all other required paperwork to the DMV. Upon approval, a bonded title will be issued and can be used to register, sell, or junk the vehicle.

What Happens if a Claim is Filed?

With a bonded title, there is a three year period during which someone with an ownership interest in the vehicle can come forward and make a claim on it. The bond agreement makes you, the bonded individual, legally responsible for paying claims. However, the surety company will typically pay any claim up front on your behalf and then turn to you for reimbursement. The terms of the bond indemnify the surety company against liability for claims.

If the three years go by with no claims, the bond expires and will not need to be renewed. You can go back to DMV and request that a clear, unbonded title be issued.

What Does It Cost?

Surety bond premiums are calculated as a small percentage of the required bond amount. At Single Source Insurance, all California bonded title premiums will have a $100 minimum. For bonds with a penalty over $7,000, the premium is 1.5%. For bonds with a premium over $25,000, we will run a credit check.

Get The Title Bond You Need

At Single Source Insurance, we can issue most California lost title bonds online in a matter of minutes. Contact us today to request a quote.

Don�t sweat it if you don�t have a title for a vehicle you want to register. There�s a process to obtain a new title if you never got one when you bought a vehicle, were given a flawed or incorrect title, or received a perfectly good title but lost it before you had a chance to register the vehicle. Learn more about the Texas bonded title process below, and contact Single Source Insurance to get the bond you need today.

What Is a Bonded Title?

A bonded title allows you to register a vehicle even if there is a possibility that someone will later turn up and challenge your ownership of the vehicle. This article walks you through the process for obtaining a bonded title in Texas, step by step.

Who Needs a Bonded Title?

If you want to register a vehicle for which you don�t have a good title or to transfer ownership of the vehicle to someone else, you�ll need to get a bonded title. To qualify for a bonded title:

• You must be a resident of Texas or be stationed in Texas on military duty
• You must have possession of the vehicle
• The vehicle cannot be abandoned, stolen, junked, or the subject of a pending lawsuit, and it must be a complete vehicle, with a motor and frame, though it need not be operational
• There cannot be any liens against the vehicle

How Does It Work?

The state�s main concern is trying to establish your ownership of the vehicle, so the Texas bonded title process will involve filling out forms and obtaining the appropriate signatures.

1. Complete Form VTR-130-SOF, �Statement of Fact for Bonded Title.� One of the items on the checklist provided on the form is a pencil tracing of the vehicle’s VIN plate. Another is the current value of the vehicle as appraised by a licensed motor vehicle dealer or insurance adjuster and recorded on Form VTR-125, or from a nationally recognized valuation guide such as the National Auto Dealers Association reference guide.

   Bring or mail the completed form to your local DMV office along with any evidence you have to help prove your ownership, such as a Bill of Sale, invoice, payment receipt, or cancelled check. Be prepared to pay the $15 administrative fee (by cash, check, or money order).

   Completing this application for a bonded title is rather straightforward if the vehicle was previously titled and/or registered in Texas, but if not, an additional step is necessary.

2. Take the vehicle to a Texas certified Safety Inspection Station and request verification of the VIN on a Vehicle Inspection Report.Only for vehicles not previously titled and/or registered in Texas. You’ll also need to have a VIN inspection performed by an auto theft investigator in the local police or sheriff’s office, to be documented on a Form VTR-68-A, “Law Enforcement Vehicle Identification Number Inspection.” This form also includes questions you must answer about the vehicle, how you got it and why you don’t have a valid title for it.
3. Upon approval of all forms and documents submitted, the DMV will send you a letter telling you the required amount of the title bond you will need to purchase. The amount will be 1.5x the appraised value of the vehicle, unless the vehicle is 25 or more years old, in which case the value will be the actual amount from the bill of sale or $4,000, whichever is higher.
4. The approval letter is good for one year. Within that year, you must purchase a three-year Texas title bond.
5. Within 30 days of purchasing the surety bond, take the following to your county�s tax office:

• the approval letter from the DMV
• all documents you submitted with your bonded title application
• the surety bond certificate
• proof that the vehicle is insured
• a completed �Application for Texas Certificate of Title�
• If the vehicle is an import, you�ll also need to provide a Customs Declaration.

You will receive a Texas bonded title, which protects the DMV and anyone with a legitimate ownership interest in the vehicle from financial loss.

The title bond remains in place for three years. If nobody contests the vehicle�s ownership by filing a claim against the bond within that time, at the end of the three years, the DMV will issue an unbonded title.

What Does It Cost?

You will pay a small percentage of the bond amount as the premium for a vehicle title bond. At Single Source Insurance, all Texas bonded title premiums will have a $100 minimum. For bonds with a penalty over $7,000, the premium is 1.5%. For bonds with a premium over $25,000, we will run a credit check.

Understanding the Costs of Auto Dealer Bonds: A Comprehensive Guide

Contact Single Source Insurance today for all of your bonding needs. You can count on us to get you the best possible deal on a Texas title bond.

This article outlines the steps required to obtain a new title in Florida when ownership of a vehicle has not been transferred or definitively established. One key step in the process of obtaining a new title is purchasing a Florida Title Bond, which protects the public and the Department of Highway Safety and Motor Vehicles (DHSMV) against financial loss in the event that a new title is issued to someone who is not a vehicle�s rightful owner.

Learn more below, and contact Single Source Insurance to get the bond you need today.

What Is A Bonded Title?

A bonded title is proof of ownership for people who have purchased a vehicle but don�t have a properly assigned title they can use to register it. Perhaps they were never given a title by the seller, or maybe they received a title that was not properly signed over to them, or they lost it before it was transferred into their name.

Who Needs a Bonded Title?

The only way to know for certain whether you are eligible for a bonded title is to ask your local DHSMV office. Explain the exact circumstances, and they will inform you as to whether or not you can get a bonded title.

Keep in mind that you are not eligible if the vehicle in question was last registered in a state other than Florida. DHSMV can tell you what other options you may have for getting your vehicle registered in such cases.

You don�t need a bonded title if you have misplaced a title that was already in your name. In such cases, you can get a duplicate certificate by applying for one from DHSMV and paying a replacement title fee.

How Does It Work?

Here are the key steps in the Florida bonded title process:

• Complete Part A of DHSMV form HSMV 82042, �Vehicle Identification Number and Odometer Verification.� This involves signing an affidavit and an odometer declaration.
• Have a Florida Notary Public, licensed auto dealer, police officer, tax collector, or DHSMV employee do a physical check of the vehicle to verify the VIN and the odometer reading and complete part B of the HSMV 82042 form confirming that information.
• Complete and sign the �Affidavit to Accompany Application for Bonded Title� form, HSMV 82026. This is your attestation that you are the rightful owner of the vehicle in question.
• Purchase a Florida title surety bond for twice the appraised value of the vehicle. Use the Kelly Blue Book or NADA national appraisal guide to get an idea of the bond amount required—but the surety company will do their own calculation as well.
• Complete the HSMV 82042 form, �Florida Application for Certificate of Title With/Without Registration.�
• Submit all completed paperwork to DHSMV. Upon approval, you will receive your bonded title from the DHSMV.

What Happens if a Claim is Filed?

Title bonds cannot be cancelled or refunded, because a claim could be filed against a bond at any time. It could be years before a lien holder or previous owner surfaces and makes a claim for the vehicle being fraudulently titled. In that event, or when any other valid claim is made against a title bond, the surety company that issued the bond will pay it�then they will turn to the person that purchased the bond for reimbursement.

What Does It Cost?

The premium for a Florida title bond is a small percentage of the required amount of the bond, which is twice the appraised value of the vehicle. At Single Source Insurance, all Florida bonded title premiums will have a $100 minimum. For bonds with a penalty over $7,000, the premium is 1.5%. For bonds with a premium over $25,000, we will run a credit check.

Understanding the Costs of Auto Dealer Bonds: A Comprehensive Guide

Contact us today for help understanding the Florida bonded title process or to request a quote on the bond you need in order to register or transfer ownership of a vehicle.

Learn How To Get An Iowa Car Dealer License. We’ll teach you everything you need to know about dealer license requirements, bonding, and renewals.

Iowa motor vehicle dealers, like those in most states, need a license and surety bond. Keep reading to find out how to apply and why the bond is required.

Get Bonded

Motor Vehicle Dealer License Requirements

Iowa motor vehicle dealers are licensed by the state Department of Transportation (DOT). Here’s some of the information required by the license application:

• Dealership name, address, email, and phone number
• Type of ownership and names of any co-owners or partners
• Addresses of any extension lots (must be in the same city or township as the dealership)
• $75,000 surety bond

The DOT has several requirements for an Iowa motor vehicle dealer’s place of business, which include:

• Office with telephone number listed under business name
• Open for business at least 32 hours per week (Monday-Friday)
• Repair facility (at least 14 feet by 24 feet for auto repairs)
• Written zoning approval
• Valid franchise agreement (if applicable)
• Financial liability coverage
• Indoor display space (new car dealers)
• Indoor or outdoor all-weather display space (used car dealers)

Most used motor vehicle dealers will need to take an eight-hour pre-licensing course�see the Iowa Independent Automobile Dealers Association (IIADA) for more information on the course. Dealers also need to pay a few licensing fees, which may vary depending on the type of dealer license being applied for:

• $70 license fee
• $20 per extension lot
• $70 registration fee
• $40 per dealer plate

Iowa motor vehicle dealer licenses are valid for two years, expiring on December 31 in even-numbered years (like this one!).

Iowa Dealer Bonds

Iowa motor vehicle dealers need a $75,000 surety bond, which is on the higher end for the industry. It was increased from $50,000 in July 2016 by SF 2228. With a good credit score, you could pay as little as 1% of the total bond amount—that’s just $750. If your credit isn’t perfect, don’t worry. Single Source Insurance can help get you the best rate for your surety bond.

The surety bond is required to ensure Iowa auto dealers adhere to state laws, specifically Chapters 321 and 322 of the Code of Iowa. Prohibited actions—which could lead to a claim being filed against the bond or license suspension or revocation—include:

• Selling vehicles other than those the licensee is licensed to sell
• Selling vehicles from a location other than the licensed business location
• Selling, loaning, or otherwise allowing another person to sell vehicles under their business license

Ready to get licensed and bonded as an Iowa motor vehicle dealer? Single Source Insurance is here to help!�