Rhode Island 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 Rhode Island 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%.

Rhode Island Motor Vehicle / Auto Dealer License and Renewal

Who Needs a Rhode Island Motor Vehicle Dealer Bond?

Under Rhode Island law, the following license types are required to file a $50,000 Surety Bond with the Rhode Island Division Of Motor Vehicles Dealers’ License & Regulation Office:

• New Car Dealers

• Used Car Dealers

• Motor Cycle Dealers

• Wholesale Motor Vehicle Dealers

• Recreational Vehicle (RV) Dealers

• Auto Auction Dealers

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

✅ Bond Amount: $50,000

What Is a Rhode Island Auto Dealer Bond?

A Rhode Island Motor Vehicle Dealer Bond is a type of surety bond required by the Rhode Island Division of Motor Vehicles (DMV) for anyone applying for a license to sell motor vehicles in the state.

🔍 What It Is:

• It's a $50,000 surety bond that acts like a financial guarantee.

• Required for car dealers, motorcycle dealers, RV dealers, auto auctions, and wholesalers.

• It's not insurance for the dealer, but protection for customers, lenders, and the state in case the dealer breaks the law.

💡 Why It’s Required:

The bond ensures that dealers:

• Follow all state laws and regulations

• Pay all required taxes and fees

• Properly transfer vehicle titles

• Do not commit fraud or unethical business practices

🛡️ How It Works:

The bond is a three-party agreement:

1. Principal – The dealer who buys the bond

2. Obligee – The Rhode Island DMV (the agency requiring the bond)

3. Surety – The bonding company that issues the bond

If a dealer violates the rules (e.g., doesn't pay sales tax or fails to transfer a title), a claim can be filed against the bond. The surety company may pay out damages up to $50,000, but the dealer must then reimburse the surety.

How to Apply for a Rhode Island Motor Vehicle Dealer License

Are you ready to launch your own dealership in Rhode Island? This guide walks you through every step needed to obtain your Rhode Island Motor Vehicle Dealer License, including required documents, bonding, insurance, and more.

✅ Step-by-Step Guide to Apply for a Rhode Island Dealer License

1. Pre-Approval of Dealership Name & Location

• Contact the Dealers’ License & Regulation Office for name and location approval before submitting your application.

• Used car dealers must include “Auto Sales” in their business name.

2. Complete Your Application Packet

Include the following:

• Dealer License Application Form

• Financial Statement prepared by a Certified Public Accountant (CPA)

• Employee forms

• A $50,000 line of credit from a bank in your business name

All documents must be signed and notarized.

3. Obtain a $50,000 Surety Bond

• Purchase a Motor Vehicle Dealer Bond for $50,000 from All American Bonds and Insurance.

• The bond must be in the D/B/A name, and signed and notarized.

• Need help with your bond? We can help you get bonded → GET A QUOTE NOW

4. Background Checks (BCI)

• Required for each owner, partner, or corporate officer.

• Obtain from:
  RI Attorney General’s Office (150 South Main St, Providence, RI)
  If you’ve moved to RI within the last 5 years, you must also submit a background check from your previous state.

• Attach a photo ID.

5. Property Requirements

• Submit a 1-year lease agreement or deed showing:
  2,400 sq. ft. indoor space (heated/enclosed)
  2,400 sq. ft. outdoor lot

• Building square footage can span multiple levels (except for showrooms, which must be ground-level).

6. Zoning & City License

• Submit either:
  A zoning approval letter from the city/town, or
  A copy of a valid second-hand license

7. Submit Photos

• Four (4) exterior photos of your dealership from all angles, showing:
  Entire building
  Lot display area

8. For Corporations or LLCs

Provide the following:

• Articles of Incorporation or LLC Operating Agreement

• Minutes showing election of officers

• Fictitious Name Report (if using a D/B/A)

• Letter of Good Standing from RI Secretary of State

9. Franchise Dealers

• Submit a Letter of Intent from the Manufacturer/Distributor

• Wait for a 30-day protest period before your application goes to the board

📋 What Happens After You Apply?

Once submitted, your application is reviewed and scheduled for a hearing before the Dealer’s Hearing Board. If approved, you must complete the following within 30 days to finalize your license.

Recommended Garage Liability Insurance Coverage for Rhode Island Dealers

In addition to the required $50,000 Rhode Island Motor Vehicle Dealer Bond, all licensed dealers in Rhode Island—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 Rhode Island. 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!