Florida Auto Dealer Bonds
Learn more about Florida Auto Dealer bonds, and get bonded today with Surety Bond Professionals.
What Are They?
The Florida Department of Highway Safety and Motor Vehicles (FLHSM), Bureau of Dealer Services, licenses auto dealers doing business in the state of Florida. The licensing process requires the purchase of a $25,000 Florida auto dealer bond. Alternatively, the dealer may provide an irrevocable letter of credit in the amount of $25,000. For most dealers, the choice between paying a small premium to purchase a surety bond and tying up $25,000 in cash or collateral is a no-brainer.
The surety bond guarantees that the bonded dealer will conduct business in compliance with the laws of the state of Florida. Failure to do so permits anyone who suffers a financial loss as a result of the dealer’s unlawful or unethical actions to file a claim and be compensated up to the full amount of the bond. Thus, the bond provides financial protection for consumers as well as for the FLHSM.
Here’s a quick look at the most important information about Florida motor vehicle dealer bonds:
- Required Bond Amount: $25,000
- Premium: $250 minimum
- Effective Date: May 1
- End Date: April 30 of next year
Who Needs Them?
In Florida, any party (individual, partnership, or corporation) that buys or sells more than two motor vehicles within a 12-month period must be licensed as a motor vehicle dealer. This applies not only to independent motor vehicle dealers but also to wholesale dealers, auction dealers, and salvage dealers buying and selling motor vehicles. Any licensed dealer who does not maintain a valid, current Florida auto dealer bond at all times is subject to revocation of their dealer license.
How Do They Work?
Motor vehicle licenses are issued for a one-year period with an expiration date of April 30. That means that every dealer’s surety bond expires on April 30 and must be renewed annually.
When a claim is filed, the surety will investigate it to make sure that it is valid before any further action is taken. Ideally, the principal would pay any valid claim without delay, but that is not often the case. To ensure that the claimant is compensated in a timely manner, the surety typically pays the claim on behalf of the principal, who must then reimburse the surety. Every surety bond agreement includes a clause that indemnifies the surety and makes the principal solely responsible for paying claims.
What Do They Cost?
The annual premium cost for a Florida auto dealer bond is a small percentage of the total $25,000 required bond amount. The surety sets the premium rate for each bond applicant based largely on the individual’s credit score, personal and business financial circumstances, and industry experience.
With good credit and financials, the premium rate for a Florida auto dealer bond is in the range of 1% to 3%. That’s a premium of between $250 and $750 per year. Those with poor credit may pay a higher premium.
Get Bonded Today
Surety Bond Professionals is here to help you get the bond you need to obtain or renew your license as a Florida motor vehicle dealer. Apply online today.