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Maryland Auto Dealer Licensing: Surety Bond Requirements
March 18, 2009 by Michele Haddon
You must obtain a surety bond in order to become a licensed dealer in the State of Maryland. There are different types of dealer licenses and requirements for each.

The following is a list of the different types of Surety Bonds required by the Maryland Motor Vehicle Administration:

Surety Bond of Vehicle and Trailer Dealer
The bond amount requirements vary depending on the type of license and volume of business.
- New Vehicle Dealer
- Used Vehicle Dealer
- Wholesale Dealer
- Trailer Dealer
- New Motorcycle Dealer
- Used Motorcycle Dealer
- New Emergency Vehicle Dealer
- Used Emergency Vehicle Dealer
Surety Bond of Motor Vehicle Manufacturer
This bond is for the following types of licenses:
- Manufacturer
- Second State Manufacturer
- Distributor
- Factory Branch
Surety Bond of Title Service Agent
The bond amount is $25,000 and a separate bond is required for each licensed location.

If you are unsure which license you need to apply for, refer to the Motor Vehicle Administration’s Summary of Dealer Types. There you will find descriptions of the different license types and links to their licensing instructions.

Depending on the type of license, you may be able to download the application from the Motor Vehicle Administration’s website. If the application is not available online, you can request one by contacting the MVA Business Licensing and Consumer Services Unit either by phone (800) 950-1MVA or email businesslicensing@mdot.state.md.us.

When applying for your license, be sure to follow all the instructions detailed in your licensing package. There are several forms to be completed, as well as various documentation to obtain (permits, insurance, bond, etc.). All required documents must be submitted along with your application, including the surety bond.

This guide should serve as a good starting point. But remember to check with the Motor Vehicle Administration for the most up-to-date licensing & bond requirements.
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Category: Auto Dealer Bonds, Commercial BondsTags: auto dealer, auto dealer bond, dealer, dealer bond, distributor, dmv, dmv bond, emergency vehicle dealer, manufacturer, motorcycle dealer, mvd, mvd bond, new vehicle dealer, title service agent, trailer dealer, used vehicle dealer, wholesale dealer | Comments (0)

Understanding the Surety Process
January 17, 2009 by Heidi Wolf
The surety underwriting procedure can often be viewed as being an agonizing ordeal for insurance agents as well as applicants needing to obtain bonds. Many times, the entire process can be very aggravating and stressful if an applicant is under a specific deadline or needs a bond very quickly. Here are some items that the surety company will most likely require. It is important to know what crucial information that a surety company or agency will require in order to be approved for any type of surety bond.

Like insurance, the surety industry is recurring. In the mid 90s, the surety industry was very pliable, and there was little underwriting being performed. A combination of the slowing economy and the poor underwriting practices from years prior caused the surety industry to suffer for the first five of five consecutive years in 2000. However, a booming economy led to more bond approvals and issuance, even for applicants that were less than qualified.

Fortunately, these “losing years” caused the market to fluctuate almost overnight – underwriting standards were tightened and premiums increased substantially. Capacity quickly became an issue for contractors, particularly at both the small and large ends of the spectrum. Small, emerging contractors were finding it increasingly more difficult to obtain any bonding capacity and large contractors were also feeling the affects of the more stringent industry. The market has fluctuated over the past couple of years, and contract bonds and some commercial bonds can still be difficult to obtain. Some items that are crucial to obtaining prior to applying for a surety bond are:

A surety bond is a form of credit. The underwriter requiring financial information from an applicant is making a credit decision without ever meeting the contractor or applicant.. There may be a substantial amount of paperwork required; however, it may be the extra paperwork required that will get an applicant approved for a bond. An underwriter will most likely request the following:

Business financials – It is beneficial and most often a requirement that these are prepared by a CPA. If it is a new company, submitting the most recent business financials will suffice.

Current personal statements on all owners (with more than 5% ownership) – These do not necessarily have to be completed by a CPA, and they are often provided by the surety company or agency.

What can an applicant expect after submitting this information to the surety company? If a complete submission is made to a surety company, an applicant can expect to hear something back within 48 hours. It is essential for the agent to make sure that plans and expectations of the applicant and the surety company are fully understood by both parties.
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Category: Auto Dealer Bonds, Bid Bonds, Commercial Bonds, Contract Bonds, Contractor License Bonds, Court Bonds, General Bonding, Misc. Commerical Bonds, Money Transmitter Bonds, Mortgage Banker Bonds, Mortgage Broker Bonds, Performance Bonds, Subdivision Bonds, Telephone Solicitor Bonds, Title Agency Bonds, Wage & Welfare BondsTags: application process, procedures, surety process, underwriting | Comments (0)

Close Call For California Motor Vehicle Dealers
November 3, 2008 by Michele Haddon
A bill was introduced earlier this year in February that, had it passed, would have made it more difficult for California auto dealers to get bonded or remain bonded.

Assembly Bill 1939 was originally written to increase the cap on the document processing charge for leased vehicles by $20 to $65 and for purchased vehicles by $10 to $65. Opponents to this bill expressed concerns on behalf of the consumers, who have faced many rising costs lately in other areas, and that this increase would be unjustified. Opponents also expressed that an increase in fees, if necessary, should be in some way linked to furthering consumer protection.

In response to opposition, the author of AB 1939 amended the bill in June. First changing the increase for the document processing charge for leased vehicles by $10 to $55 and dropping the increase for purchased vehicles.

The amendment also included a change in the surety bond requirement for dealers and remanufacturers. Currently, dealers and remanufacturers must file a $50,000 bond with their license. If the bill were to pass, the surety bond requirement would be increased to $100,000. The Surety Bond of Motorcycle Dealer, Motorcycle Lessor-Retailer, All-Terrain Vehicle Dealer, or Wholesale-Only Dealer (Less than 25 Vehicles per Year) would remain at $10,000.

These amendments failed to appease the original opponents of the bill and brought on additional opponents because of the increase in the surety bond requirement. Among these opponents, The Surety & Fidelity Association of America (SFAA) raised concerns that the increased bond amount would make it even more difficult for dealers to obtain or maintain their bonding requirements. Others expressed concerns that the increased bond amount would serve as another barrier to dealers just getting started, especially used car dealers.

Fortunately, thanks to the efforts of the SFAA, AIA, and other local surety associations, the bill died in Senate after the hearing was cancelled by the author of the bill.

This topic reinforces the importance of keeping yourself informed of the latest activities of your state legislation. There may be other bills introduced in the future that could be unfavorable to your industry. It is essential that they hear your opinions, so that decisions can be made in the best interests of everyone involved.

Helpful Links

Here you search for information about a bill using keywords or the bill number at:
http://www.leginfo.ca.gov/bilinfo.html

Submit comments to the Assembly on pending legislation

They also offer an index that list bills introduced in both the Assembly and the Senate.
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Category: Auto Dealer Bonds, Commercial Bonds, Surety NewsTags: auto dealer, Auto Dealer Bonds, california, dealer, legislation, motorcycle dealer, surety bond | Comments (0)

Business Bonding
November 19, 2007 by Administrator
The term “bond” can be applied to many different financial products, but what is “business bonding”? To be bonded means that an insurance carrier is guaranteeing the performance of your business. This is not be confused with a corporate bond, which is a financial instrument used to raise capital. When a business gets bonded it does not raise capital, but does bring security to any work performed by said business.

How does business bonding work?
When a company is bonded, there are three parties involved. The first one is the company itself, referred to as the principal. The second party is the bonding company, also referred to as the surety or carrier. The third party is called the obligee. The obligee is the party that requires the business to be bonded. Here are two examples…
Some common bonding misconceptions
Getting your business bonded helps protect it – Not true, getting your business bonded actually protects your clients! If a claim arises, the surety will look to your company for repayment.

Everyone qualifies for bonding – Not everyone qualifies for surety bonding. True surety underwriting makes it so that only the most financially sound and responsible companies qualify for bonding (However, most do these days with the variety of programs available).

Everyone gets the same rate – Rates can vary greatly and can be changed due to your credit score, company’s financial strength, or what the bond is actually guaranteeing.

If you are in need of a bond, you may want to read our last article, How To Become Bonded. It highlights some of our best articles to tell you how to get the best rate for your bond and what you need to do to ensure you qualify.
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Category: Auto Dealer Bonds, Bid Bonds, Commercial Bonds, Contract Bonds, Contractor License Bonds, Court Bonds, General Bonding, Misc. Commerical Bonds, Money Transmitter Bonds, Mortgage Banker Bonds, Mortgage Broker Bonds, Performance Bonds, Subdivision Bonds, Telephone Solicitor Bonds, Title Agency Bonds, Wage & Welfare Bonds Comments (0)

How To Become Bonded
by Administrator
Today we are going to get back to the basics of bonding. We will go over what it means to be bonded and more importantly how to become bonded. We have gone over everything you need to know about surety bonding in previous articles. Therefore, we will highlight these standout articles rather than try to reinvent the wheel.

What Is A Surety Bond? – Learn what a surety bond actually is. You may be surprised to find out that they do not protect you whatsoever, but are a guarantee that is a form of credit.

How To Qualify For A Surety Bond – Not everyone qualifies to be bonded. Learn what you can do to ensure you are “bondable”. Reading this article will not only ensure that you get bonded, but also that you get the best possible rate!

Surety Companies: How To Choose The Best One For You – Bonding companies can vary on rates and underwriting practices. Find out what differences there are and how to go about finding the right carrier for your needs.

The process of becoming bonded is pretty strait forward:

1. Find out bond requirements
2. Apply for bond
3. Get approved
4. Sign indemnity agreement
5. Pay premium
6. Sign bond and send to obligee

If you read all of the articles above you will be well on your way to knowing what you need to do to become bonded. If you have further questions, feel free to ask them on our free surety bond forums.

When you are ready, you can apply for the bond type you need.
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Category: Auto Dealer Bonds, Bid Bonds, Commercial Bonds, Contract Bonds, Contractor License Bonds, Court Bonds, General Bonding, Misc. Commerical Bonds, Money Transmitter Bonds, Mortgage Banker Bonds, Mortgage Broker Bonds, Performance Bonds, Subdivision Bonds, Telephone Solicitor Bonds, Title Agency Bonds, Wage & Welfare Bonds Comments (0)

Maryland Auto Dealer Licensing: Surety Bond Requirements

Understanding the Surety Process

Close Call For California Motor Vehicle Dealers

Business Bonding

How To Become Bonded