Which States Have the Highest Auto Dealer Bond Rates?

Your personal credit isn't the only thing that can increase your dealer bond rate. The state where you sell vehicles can also be a factor in boosting your bond costs.

Top 10 States With the Highest Auto Dealer Bond Rates

Here are the top ten states with the highest losses for the past few years, which usually means you'll have to pay higher rates for your auto dealer bond (alphabetical order):

How to Get the Lowest Rates

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

Unfortunately, if you want to operate a dealership in any of these states, you may be surprised to find your bond costs are higher than you expected.

Why Dealer Bond Costs Vary Across the Country

The states above have higher rates than others because the surety companies writing bonds for these states have experienced very high bond claim losses for the past several years; this means these states have a high number of dealer bond claims, often larger than average as a result of dealers breaking the law while selling vehicles. The more claims that are filed on dealer bonds in a particular state, the higher the surety company's bond rates rise. Why? Because when a surety company provides you a bond, they are providing a form of credit by guaranteeing you will operate your dealership professionally and won't trigger any bond claims.

When an auto dealership breaks the law, a claim can be filed on the bond. The surety company will pay the bond claim at first, but will come to the dealer for reimbursement. You may be wondering, how are there any losses if the surety company gets paid back? Many dealers don't pay their claims, and surety companies often have to pursue them legally, costing thousands and causing losses.

Which States Have the Lowest Rates?

Auto dealer bond rates for the rest of the states in the country are all roughly the same since the number of claims and losses are lower. This is when knowing what your bond costs are based on comes in handy so you can save hundreds on your dealer bond.


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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