Washington State 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 Washington state auto dealer bond needs.
What Are They?
A Washington state auto dealer bond is a type of license and permit surety bond. This is because purchasing one is a requirement for getting and keeping a license to operate a dealership anywhere in the state. The bond serves as a dealer’s pledge to do business in compliance with all applicable state laws.
Additionally, a Washington state auto dealer bond ensures that funds will be available to compensate any consumer who experiences a financial loss due to the dealer’s violation of the terms of the surety bond agreement. It also protects the state against liability for having issued the dealer a business license.
Who Needs Them?
The Washington State Department of Licensing (DOL) requires applicants for auto dealer licenses to purchase a $30,000 auto dealer bond. This requirement applies to dealers selling new and/or used vehicles, including trucks, motor homes, and automobiles, whether they are retailers or wholesalers. The bond must be renewed at every license renewal and remain in force at all times to avoid license revocation.
Speak with a Surety Bond Professionals agent today to discuss your bonding needs.
How Do They Work?
A Washing state auto dealer bond is a legally binding agreement between three parties:
- As the party requiring the bond, the DOL is the “obligee.”
- The dealer purchasing the bond is the “principal.”
- The bonding company approving the bond is the “surety.”
A violation of the terms of the surety bond agreement that results in financial harm to a consumer gives the injured party the right to file a claim against the dealer’s Washington state auto dealer bond. If the surety finds the claim to be valid, it will be paid up to the bond’s full $30,000 “penal sum.”
The surety typically pays the claim on behalf of the principal, even though it’s the principal who is legally obligated to pay all valid claims. However, that payment creates a debt that the principal must subsequently repay to the surety.
What Do They Cost?
Washington state auto dealer bonds are sold for an annual premium and are subject to underwriting. The surety’s main concern in issuing an auto dealer bond is the amount of risk involved in paying claims on the principal’s behalf—specifically the risk of having to take legal action against the principal to collect on that debt. The best indicator of this risk is the principal’s personal credit score.
A principal with good credit will pay a premium that’s in the range of 1% to 2% of the $30,000 penal sum. Someone with lesser credit may pay a higher premium rate.
Get a Quote
Our surety bond professionals will get you the Washington state auto dealer bond you need at a competitive rate.