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 your Florida Salvage Dealer bond needs.
What Are They?
Florida issues several different types of motor vehicle dealer licenses, one of which is a salvage dealer license. To become licensed as a salvage dealer in Florida, you’ll have to purchase a Florida salvage dealer bond, which is classified as a license and permit surety bond.
In purchasing a Florida salvage dealer bond, you are guaranteeing to operate your business in accordance with all applicable state laws. If you don’t live up to that guarantee, and someone suffers a financial loss as a result, the injured party can file a claim against your bond and be compensated for that loss.
Who Needs Them?
If you’re seeking a license as a salvage dealer to acquire junk vehicles specifically to sell their parts, you’ll need to purchase a $25,000 Florida salvage dealer bond. If you’re going to be reselling entire salvaged vehicles, you’ll also need a motor vehicle dealer license and a separate $25,000 surety bond.
The $25,000 amount is known as the bond’s penal sum, because it represents the maximum penalty that the surety bond company (the “surety” for short) will pay out on a claim or on all claims in a given year.
In Florida, all dealer licenses have a term of 12 months and expire on April 30. To avoid license suspension or revocation, you must have an active Florida salvage dealer bond in force at all times. So, you’ll need a new bond at each license renewal.
Speak with a Surety Bond Professionals agent today to discuss your bonding needs.
How Do They Work?
Surety bond contracts are legally binding between three parties, which are referred to as the obligee, the principal, and the surety:
- The bonding company that authorizes and approves a Florida salvage dealer bond is the “surety.”
- The party requiring the bond, the Florida Department of Highway Safety and Motor Vehicles, or FLHSMV, is the “obligee.”
- The salvage dealer required to purchase the bond is the “principal.”
As the principal, you will be legally obligated to pay all valid claims, and it’s up to the surety to determine which ones are valid and should be paid. However, the normal practice is for the surety to pay a valid claim on the principal’s behalf and then be repaid by the principal. The claimant benefits from prompt payment, and you, the principal, can repay the surety in manageable installments.
What Do They Cost?
In selling you a Florida salvage dealer bond, the surety is taking on a certain amount of risk. The best measure of that risk is your personal credit score. The surety’s underwriters will also consider your personal and business financial strength, how long you’ve been in the vehicle salvage business, and whether you’ve incurred claims in the past.
The more creditworthy you are in the view of the surety, the lower the premium you’ll pay for a Florida salvage dealer bond. You could end up paying an annual premium as low as 1% of the bond’s $25,000 penal sum, or only $250, if you’re deemed a good credit risk.
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Our surety bond professionals will get you the Florida salvage dealer bond you need at a competitive rate.