What is an Idaho Auto Dealer Bond?
Auto dealers operating in just about any state in the country need to comply with licensing requirements if they want to operate a legal business. Securing a surety bond is one of these requirements for auto dealers in Idaho, known more commonly as an Idaho auto dealer bond. As a type of surety bond, an Idaho auto dealer bond protects customers of a licensed auto dealer as well as the state from fraudulent business activities or failure to comply with state rules and regulations in the operation of an auto dealer business.
An Idaho auto dealer bond is not insurance for the auto dealer. Instead, customers or the state may file a claim against the bond to cover financial damages they incur due to the auto dealer's conduct.
Who Needs an Idaho Auto Dealer Bond?
In the state of Idaho, all auto dealers must have a license. That means that anyone who plans to engage in the business of selling new or used vehicles is required to post an Idaho auto dealer bond. Auto dealers in Idaho include individuals or businesses that sell motorcycles, ATVs, UTVs, snowmobiles, retail new or used vehicles, or wholesale new or used vehicles.
Idaho Auto Dealer Bond Obligee Details
Surety bonds like an Idaho auto dealer bond represent a contractual agreement between the surety company providing the bond, the auto dealer, known as the principal of the bond, and the obligee, or the licensing authority requiring a bond to be in place. The obligee for an Idaho auto dealer bond is as follows:
Idaho Transportation Department
Dealer Services Division
PO Box 34
Boise, Idaho 83731
How Much Does an Idaho Auto Dealer Bond Cost?
An Idaho auto dealer bond varies in cost based on two main factors: the total amount of the bond required by the state and the financial track record of the licensed auto dealer. It is first necessary to understand what the state requires in terms of the bond amount. Motorcycle, ATV, UTV, and snowmobile dealers must have a bond of $10,000. Retail auto dealers need a $20,000 bond, while wholesale dealers are required to secure a $40,000.
The amount of the bond is not the out-of-pocket cost paid by the auto dealer, however. Instead, the surety company providing the bond calculates a bond premium as a percentage of the total bond amount. The cost ranges from 1 to 10% of the total bond amount for most auto dealers. Because the surety company takes on risk when issuing an Idaho auto dealer bond, a credit check is required. Auto dealers with a healthy credit history pay a lower bond premium than those with a spotted financial history.
How do You Get an Idaho Auto Dealer Bond?
Getting an Idaho auto dealer bond is a straightforward process. Licensed auto dealers can submit a quote request online to see what the cost of the bond will be. Once approved and paid, the surety company provides the bond details to the auto dealer for their records. Idaho auto dealer bonds renew every two years, at the same time the license renews.