West Virginia 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 West Virginia auto dealer bond needs.
What Are They?
West Virginia auto dealer bonds help maintain the integrity of the state’s auto dealing industry and provide financial protection for the state and the auto-buying public. They require licensed auto dealers operating in West Virginia to do so in full compliance with the law or compensate those who are injured financially by the dealer’s unlawful or unethical acts.
Who Needs Them?
The West Virginia Division of Motor Vehicles (DMV) requires every applicant for an initial or renewal auto dealer license to purchase a $25,000 West Virginia auto dealer bond. The bond must be renewed annually so that there is always an active bond in force. Allowing the bond to expire carries the risk of license revocation.
Speak with a Surety Bond Professionals agent today to discuss your bonding needs.
How Do They Work?
The three parties to any auto dealer bond are known as the bond’s “obligee,” “principal,” and “surety.” In West Virginia:
- The “obligee” requiring the bond is the West Virginia DMV, the licensing authority requiring the bond.
- The “principal” required to purchase the bond and legally obligated to pay all valid claims is the auto dealer.
- And the “surety” is the party guaranteeing the bond.
There are any number of reasons for claims being filed against a West Virginia auto dealer bond. When the obligee files a claim, it’s usually because the principal has failed to remit taxes and fees owed to the state. When a consumer files a claim, it’s to recover damages caused by such fraudulent acts as unlawfully altering a title, falsifying an odometer reading, deliberately misrepresenting a vehicle’s condition or history, or otherwise causing the injured party to incur a financial loss.
Once the surety ascertains that a claim is valid, it must be paid. Typically, in its role as guarantor, the surety will pay a valid claim initially, on behalf of the principal. This shifts the principal’s obligation to repaying the surety rather than making payment directly to the claimant. Not repaying the surety can subject the principal to legal action by the surety.
What Do They Cost?
The surety sets the premium rate, which is used as a multiplier to determine the bond’s annual premium. The main underwriting concern is the risk the surety will be taking on in paying claims on the principal’s behalf and getting reimbursed for the claim amount. The principal’s personal credit score is the best predictor of the relative ease or difficulty of collecting on that debt.
Here’s the general rule of thumb: the higher the principal’s credit score, the lower the risk to the surety, and the lower the premium rate. The reverse is also true. A low credit score signals a higher risk level, which will result in the surety assigning a higher premium rate. The premium rate a given principal will pay can range from less than one percent to more than three percent, depending on the individual’s perceived creditworthiness.
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Our surety bond professionals will get you the West Virginia auto dealer bond you need at a competitive rate.