$50,000 California Motor Vehicle Dealer Bond

Businesses are required to file a $50,000.00 bond with the State of California Department of Motor Vehicles (the "Obligee") to activate their license. The bond protects the Obligee by transferring to a surety bond company the cost of ensuring the public is compensated for damages resulting from a licensed business breaking licensing laws.

Motor Vehicle Dealer Bond

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How much does the California Motor Vehicle Dealer bond cost?

California Motor Vehicle Dealer bonds typically cost between $400 and $4,500 depending on the personal credit, license history, and experience of the business owners and the surety carrier issuing the bond.

Credit Premium Rate Bond Cost
0.80% $400
1.00% $500
1.25% $625
1.50% $750
2.00% $1000
3.00% $1500
4.00% $2000
5.00% $2500
5.25% $2625
7.00% $3500
8.00% $4000
9.00% $4500

Is a Credit Check Required for California Motor Vehicle Dealer Bonds?

Surety carriers will run a credit report as part of underwriting the bond because the business ultimately must reimburse the surety bond company for any claims made on the bond.

Why is the California Motor Vehicle Dealer bond required?

Businesses are required to purchase and file a $50,000 bond with the State of California Department of Motor Vehicles to activate their license. The bond protects the Obligee by transferring to a surety bond company the cost of ensuring the public is compensated for damages resulting from the failure of a licensed business complying with the provisions of licensing laws.

How does the California Motor Vehicle Dealer bond work?

California Motor Vehicle Dealer bonds must be issued by an insurance carrier admitted by the California Department of Insurance. The insurance company issuing any surety bond, such as the California Motor Vehicle Dealer bond, will also be referred to as the "surety company" or the "bond company". The business is referred to as the Principal, the surety bond company as the Obligor and the State of California Department of Motor Vehicles as the Obligee.

The surety company provides the Obligee a guarantee (the surety bond) that the customers, vendors and employees of a licensed business will receive payment for financial damages due to a violation of licensing law up the bond amount stated on the bond form ("penal sum"). The bond company also directly receives claims from the public and determines the validity of claims. Ultimately, the licensed business owners are responsible for their actions and required by law to reimburse the surety company for any payments made under the bond or face indefinite license suspension.