Colorado Motor Vehicle / Auto Dealer Bond Cost

While $50,000 might seem like a large amount to pay, in reality, you only need to pay a percentage of it to get bonded, which is called the bond annual premium. The surety company will look at several factors to determine your Colorado motor vehicle dealer bond cost, most importantly, your credit score. Factors such as years licensed and years of industry experience will also play a factor in your dealer bond cost.

• If your credit score is above 650, you’ll likely have to pay between .75% and 2% of the bond amount.

• For applicants with credit scores between 600 and 649, the rates range between 2.5% and 4%.

Colorado Motor Vehicle / Auto Dealer License and Renewal

Who Needs a Colorado Motor Vehicle Dealer Bond?

Under Colorado law, the following license types are required to file a $50,000 Surety Bond with the Colorado Motor Vehicle Dealer Board:

• Motor Vehicle Dealers

• Used Motor Vehicle Dealers

• Wholesalers

• Wholesale Motor Vehicle Auction Dealers

• Powersports Vehicle Dealers

• Used Powersports Vehicle Dealers

Whether you're selling cars, motorcycles, trailers, or powersports vehicles—if you’re applying for one of these licenses, you need a dealer bond.

✅ Bond Amount: $50,000.
🚛 Trailer dealers (trailers under 2,000 lbs): $5,000.

What Is a Colorado Auto Dealer Bond?

A Motor Vehicle Dealer Bond is a type of surety bond required by the Colorado Auto Industry Division (AID). It ensures that dealers comply with all applicable laws and protects consumers from fraudulent or unethical business practices.

This is not insurance for you—it's protection for your customers and the State of Colorado. However, you're the one responsible for obtaining the bond as part of your dealer license application.

Colorado Dealer License Types Covered

We help all types of Colorado dealers meet bonding requirements:

• 🚗 Motor Vehicle Dealer

Engaged in selling or leasing new or used vehicles. If you offer more than 3 vehicles for sale per year at one location, you likely need this license.

• 🚙 Used Motor Vehicle Dealer

Selling used vehicles for profit—same 3-car threshold applies.

• 🔄 Wholesaler

Selling vehicles only to other licensed dealers—not the general public.

• 🏁 Wholesale Motor Vehicle Auction Dealer

Facilitates wholesale auctions where only licensed dealers purchase vehicles.

• 🏍 Powersports Vehicle Dealer

Selling new or used powersports vehicles (e.g., motorcycles, ATVs, snowmobiles). More than 10 sales/year at one location = license required.

• 🛵 Used Powersports Vehicle Dealer

Engaged in selling used powersports vehicles to consumers or other 

How to Apply for a Colorado Motor Vehicle Dealer License

To be licensed as a dealer or wholesaler in Colorado, applicants must complete the following:

1. Net Worth of at least $100,000

2. Vantage Score of 701+ from Experian

3. Background Check

4. Pre-Licensing Education Certificate (for used dealers, wholesalers, auctions)

5. Pass the Mastery Exam

6. Fingerprint Verification

7. Submit a $50,000 Surety Bond

8. Provide Secure Verifiable ID (SVID)

9. Complete DR 2109 & DR 2109B Addendum Forms

10. Submit Business Plan & Lease

11. File Required Business Formation Documents

For a complete checklist and links to forms, visit the Colorado Auto Industry Division website.

Recommended Garage Liability Insurance Coverage for Colorado Dealers

In addition to the required $50,000 Colorado Motor Vehicle Dealer Bond, all licensed dealers in Colorado—whether retail, wholesale, or powersports—should carry Garage Liability Insurance to protect their business operations. While not always required for licensing, this coverage is highly recommended and often requested by lenders, floorplan companies, landlords, and customers.

Here’s what your garage liability policy should ideally include:

1. Garage Liability Coverage (General Liability + Auto Liability)

Garage Liability Insurance is a hybrid policy that combines aspects of a commercial auto policy and general liability insurance to cover:

• Bodily injury and property damage arising from your business operations

• Test drives, customer vehicles, and vehicles in your care, custody, or control

• Slips and falls on your lot

• Legal defense costs

Recommended Limits:

• $100,000 / $300,000 / $100,000 or higher

• Many lenders and floorplan providers require $1 million liability limits

2. Garagekeepers Insurance

Protects your customers’ vehicles while they are on your premises for:

• Repairs

• Storage

• Test drives
  This is especially important if you operate a repair shop, detail vehicles, or accept customer trade-ins.

Coverage Types:

• Legal Liability (only covers damage if you're found negligent)

• Direct Primary (covers damage regardless of fault — highly recommended)

3. Dealer's Physical Damage / Open Lot

Covers damage to your inventory from:

• Collisions

• Theft

• Vandalism

• Weather events (hail, wind, flood, etc.)

Make sure your inventory value is accurately reported to ensure full protection.

4. False Pretense Coverage

Covers losses when a vehicle is voluntarily turned over to someone under fraudulent pretenses (e.g., bad checks or identity fraud). This is essential for wholesale and retail dealers who sell to unknown buyers.

5. Errors & Omissions (E&O)

Provides coverage for clerical mistakes, title processing errors, or compliance violations. E&O is especially valuable if your dealership handles in-house financing or lien work.

6. Cyber Liability (Optional)

Recommended if you collect customer data (SSNs, driver’s license info, or credit applications). This covers:

• Data breaches

• Ransomware attacks

• Identity theft liability

Need Help with Garage Liability Insurance?

At All American Bonds and Insurance, we specialize in insuring licensed auto and powersports dealers in Colorado. Whether you're starting your first dealership or expanding operations, we’ll help you choose the right protection at a competitive rate.

✅ Fast quotes
✅ Low down payments
✅ Coverage that meets dealer board and lender requirements

📞 Call us at (844) 321-2663 or Get a Quote Now!