Which States Are the Riskiest to Buy Your Auto Dealer Bond?

Whether it's due to a high number of bond claims or deceitful attorneys, find out if your state is listed as one of the most risky to buy an auto dealer bond for your dealership.

Top 10 Riskiest States to Buy Your Bond

There are certain states where sureties have especially high losses, which means there are a large amount of auto dealer bond claims due to dealers acting unprofessionally and breaking the law. While it's unclear whether the huge amount of bond claims in these states are caused by high competition among dealers, lack of proper training or other unknown reasons, the states below have had the highest losses for several years, making them the most risky states to purchase your bond (alphabetical order):

Avoid Claims at All Costs

  • California
  • Florida
  • Illinois
  • Maryland
  • Minnesota
  • Nebraska
  • New Mexico
  • Oregon
  • South Carolina
  • Tennessee

The More Bond Claims, The Riskier the State

Bond claims happen when an auto dealer acts fraudulently or breaks the law. Claims are first paid by the surety company who wrote the bond, but as the dealer on the bond, you are responsible to pay them back. Keep in mind, when a surety writes your dealer bond, they are providing you a form of credit by guaranteeing you will operate according to all laws. If you don't pay the surety company back for claims you cause, they will likely pursue you legally for reimbursement, which can cost the surety company thousands and cause losses. This is why states with a large amount of auto dealer bond claims have a higher risk for legal action on dealers and often means you'll have to pay higher rates for your dealer bond in these states.

Attorneys Prey On Dealers in High Claims States

There are manipulative attorneys who have made a living by abusing dealers through claims on their auto dealer bonds. How? All auto dealer bonds have an aggregate limit, which means single or multiple bond claims cannot be larger than the bond amount. However, some states' legal systems more easily allow attorneys to argue that bond claims can be larger than the aggregate limit, and several have won that argument.

Many cases in Florida have been well documented where attorneys have exploited auto dealer bond claims made by their client. The main tactic used by these attorneys is purposely dragging out relatively simple bond claim cases to rack up tens of thousands of attorney fees, often totaling many times more than the bond claims themselves.

One of the more serious and recent cases happened when an auto dealership in Orlando, Florida had a $12,000 claim filed on their bond by one of their customers. The customer and their attorney argued that they should be paid the $151,000+ dollars in fees that the attorney deliberately accumulated throughout the case. Although the plaintiff lost the case, there are other similar cases that have been won, costing both the auto dealer and the surety company thousands while the customer and his attorney collected above the face value of the bond.

Once lawyers saw that they could exploit dealer bond claims in Florida, the flood gates opened and hoards of attorneys started using similar tactics to make fast, easy money. This can happen in any state that allows a leak in the bond claim legal process, and may be more likely to happen where there is a huge amount of auto dealer bond claims such as in the states listed above.


Eric is an industry expert that specializes in taking complex surety concepts and explaining them in terms that make sense to the general public. He also manages the JW Surety Bonds website and works with various partners to help further educate the public on suretyship using various mediums.

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