Auto Dealer Bond

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Auto Dealer Bond

Any business or individual that wants to become a licensed car dealer is required to obtain an auto dealer bond in California. An auto dealer bond, like other surety bonds, is a guarantee to the state and consumers that the dealer will comply will all state regulations for the industry.

This type of bond is also known by several different names, including DMV bond, dealer bond, used car dealer bond, motor vehicle dealer bond, automobile bond, and car dealer bond.

This bond will protect consumers from situations such as:

  • Unethical business practices

  • Misrepresentation of the vehicles

  • Failure to pay required motor vehicle fees

  • Neglecting to make state sales tax payments

  • Failing to deliver valid title

If one such situation occurs, the complainant can file a claim against the bond for purposes of recouping their losses. The surety company will determine if the claim is valid. If so, then a payment, up to the total amount of the bond, will be paid and the bonded dealer will then be required to reimburse the surety company for the claim.

Used Car Dealer Bond

Some states may require an auto dealer to obtain a used car dealer bond if they plan to sell pre-owned vehicles through their dealership. This might be needed in addition to the auto dealer bond.

These types of bonds help protect consumers who purchase a pre-owned vehicle through a dealership from fraud and other wrongdoings from an auto dealer and his or her employees.

If you are unsure if you need to purchase a separate used car dealer bond for your dealership, contact us today to speak with a licensed agent. They will be able to walk you through the process of getting your used car dealer bond.

How much will a used car dealer bond cost

The cost of a car dealer bond premium is a small percentage of the total bond amount. A qualified applicant could pay as little as 1% of the bond to get covered. Submit your request for a free quote today, and we will work quickly to make sure you have all the paperwork you need to meet your state’s requirements for your business.

How does the car dealer bond work?

Bond helps protect consumers from purchasing a vehicle that has been misrepresented by the salesperson. It also prevents dealerships from using unethical business practices, failing to provide a valid title for the vehicle, or failing to pay required sales tax and motor vehicle fees to the state.

If anything like this occurs, a claim can be filed against the bond in order to compensate either the state or the consumer who has suffered a loss because of the actions of the dealership.

In a used car dealer bond, there are three parties: the obligee, the principal, and the surety.

The obligee is the state agency that requires a dealership to obtain the bond.

The principal is the company or individual who must purchase the bond.

The surety is the company that agrees to issue a payment on behalf of the principal if the terms of the bond are not met. When a surety company has to issue a payment, the principal will be responsible for reimbursing the surety company for any money paid out of the claim.

Having a bonded company gives the public more confidence in doing business with your dealership. They will feel that there is less risk because you made a financial commitment to follow your state’s regulations when it comes to used car sales.

What do I have to do to get a bond?

To get your bond quickly, request your free quote for an auto dealer bond. You will fill out a simple application so that our agents can get you the most accurate quote. We will let you know if there are any required documents for your bond. Once we have all of the paperwork completed, you will pay your bond premium. We will then send out your bond paperwork to you so that you can complete your state licensing requirements.

Our team is ready to guide you through the entire bonding process. If you have any questions about an auto dealer bond or any other bonds that you might require for your business, give us a call 323-999-2858


Commercial General Liability Insurance (CGL) is a type of insurance policy that provides coverage to a business for bodily injury, personal injury and property damage caused by the business’ operations, products, or injury that occurs on the business’ premises. Commercial general liability is considered comprehensive business insurance, though it does not cover all risks a business may face.

Lost Document Bond

A Lost Document Bond (also known as a Lost Instrument, Lost Note or Lost Deed Bond) is used when a financial certificate is lost or stolen. Before the bank or financial institution issues you a replacement, they might require you to secure a Lost Document Bond.

License Bonds, Permit Bonds and Miscellaneous Guarantee Bonds

A license and permit bond guarantees that a business will operate in accordance with federal, state, or local laws and regulations. Each license bond is specific to one industry, and protects customers and/or the state from damages. Most commonly, license bonds protect governments and consumers from fraudulent practices committed by the business that is bonded. In any industry that requires bonding, each business must be licensed and bonded before they are allowed to legally operate.


A performance bond, also known as a contract bond, is a surety bond issued by an insurance company or a bank to guarantee satisfactory completion of a project by a contractor.

Errors and Omissions Insurance (E&O)

Errors and Omissions Insurance (E&O) is a type of professional liability insurance that protects companies and their workers or individuals against claims made by clients for inadequate work or negligent actions. Errors and omissions insurance often covers both court costs and any settlements up to the amount specified by the insurance contract.

Auto Dealer Bonds

Auto Dealer Bonds are guarantees that protect your customers. Should you break the rules, your clients can make claims against your bond which you’re responsible to pay. For example, if you sell a vehicle with invalid tags, a claim can be made.


Tel: (323) 299-2858


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