Auto Dealer Surety Bond FAQ

Auto dealer surety bonds are required in every state, yet many dealers don’t fully understand how they work. This FAQ answers the most common questions dealers ask about costs, claims, renewals, and licensing requirements—so you can stay compliant and avoid delays.

What Is an Auto Dealer Surety Bond?

An auto dealer surety bond is a state-required financial guarantee that ensures a dealership follows motor vehicle laws and ethical business practices. It protects consumers and the state—not the dealer.

Why Is an Auto Dealer Surety Bond Required?

States require dealer surety bonds to protect buyers from fraud, title issues, unpaid taxes, and other violations. If a dealer fails to comply with the law, a claim may be filed against the bond.

Is a Surety Bond the Same as Insurance?

No. Insurance protects your dealership. A surety bond protects the public. If a valid claim is paid, the dealer is responsible for reimbursing the surety company.

How Much Does an Auto Dealer Surety Bond Cost?

Dealers pay a small annual premium—not the full bond amount. Rates are based on credit, financial history, and state bond requirements.

Does a Bond Require a Credit Check?

Yes. All surety companies review credit as part of underwriting. This is standard and does not impact your credit score.

What Happens If a Claim Is Filed?

A claim does not automatically revoke your license. The state investigates the claim, and unresolved or repeated violations may lead to penalties. If the surety pays a claim, the dealer must repay the surety.

Do Dealer Surety Bonds Need to Be Renewed?

Yes. Your bond must remain active at all times. A lapse can result in license suspension or cancellation.

Who Should I Get My Dealer Surety Bond From?

All American Bonds and Insurance specializes in auto dealer surety bonds nationwide. They offer fast approvals, competitive rates, and accurate state filings through QuickerBonds.com.