Connecticut Auto Dealer Bonds
Surety Bond Professionals is a family owned and operated bonding agency with over 30 years of experience. With access to a broad range of surety markets, our expert agents are ready to assist with all of your Connecticut auto dealer bond needs.
What Are They?
Connecticut auto dealer bonds help ensure an orderly and fair motor vehicle marketplace in the state. They obligate licensed dealers to do two things:
- Operate in full compliance with the state and federal laws governing vehicle trading
- Compensate those financially harmed by their noncompliant and unlawful or unethical business practices
The Connecticut Department of Motor Vehicles (DMV), which issues dealer licenses, requires the bond and is referred to as the bond’s “obligee.” The bond protects the state by providing a way to collect unpaid taxes and fees owed by a licensed dealer, known as the bond’s “principal.” It also protects the public against financial losses resulting from the principal’s malfeasance, such as fraudulently altering a title, tampering with an odometer, or misleading a consumer about a vehicle’s condition.
Who Needs Them?
DMV requires everyone applying for a new dealer’s license or renewing an expiring license to purchase a Connecticut auto dealer bond in the amount of $50,000. Unless there is an active auto dealer bond in force at all times, a dealer may be subject to fines and penalties, including license revocation.
Speak with a Surety Bond Professionals agent today to discuss your bonding needs.
How Do They Work?
A Connecticut auto dealer bond is a legally binding contract among three parties—the DMV as obligee, the dealer as principal, and the bond’s guarantor, referred to as the “surety.” The terms of the surety bond agreement legally obligate the principal to pay all valid claims against the bond and indemnifies both the obligee and the surety against any legal responsibility for compensating claimants.
However, the surety guarantees the payment of claims and therefore typically will pay a valid claim initially and then be reimbursed by the principal. This practice ensures that claimants are compensated in a timely manner, but it does not absolve the principal of the legal obligation to pay. A principal who fails to repay the surety for a claim paid on the principal’s behalf can be sued by the surety and end up paying court costs and legal fees as well as the original claim amount.
What Do They Cost?
The annual premium for a Connecticut auto dealer bond depends largely on the bond applicant’s creditworthiness. That’s how the underwriters assess the risk to the surety, specifically the risk of not being repaid readily by the principal for claims paid on the principal’s behalf. Someone who has been responsible about paying debts in the past is likely to continue to be financially responsible.
The higher the principal’s personal credit score, the lower the risk to the surety, which is deserving of a low premium rate, potentially less than one percent. Conversely, a low credit score warrants a higher premium rate, as high as ten percent or even more.
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Our surety bond professionals will get you the Connecticut auto dealer bond you need at a competitive rate.