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An Indiana auto dealer bond is a type of license and permit bond required to operate a dealership anywhere in the state of Indiana. The bond is a dealer’s pledge to do business in compliance with all applicable Indiana statutes. It specifically guarantees that funds will be available to pay the following:
There must be an Indiana auto dealer bond in force at all times in order to prevent suspension or revocation of the dealership’s license to operate.
The Indiana Secretary of State requires people selling 12 or more new or used vehicles a year to obtain a license as a dealer in new vehicles, used vehicles, or both. The term “vehicles” includes automobiles, trucks, motorcycles, off-road vehicles, snowmobiles, and manufactured homes.
If you need an Indiana motor vehicle dealer’s license (commonly referred to as an auto dealer’s license), you also need an Indiana auto dealer’s bond in the amount of $25,000.
The surety bond agreement for an Indiana auto dealer bond is a legally binding contractor between three parties:
The principal’s violation of any terms of the surety bond agreement that results in financial harm to the obligee or a consumer is likely to result in a claim against the Indiana auto dealer bond. If a claim is filed, the surety will investigate to make sure it’s valid before approving it for payment.
The surety bond agreement makes the principal solely responsible under the law for paying claims. However, the normal practice is for the surety to pay a claim on behalf of the principal, which creates a debt that the principal owes to the surety and is legally obligated to repay.
The surety charges a premium that is only a small percentage of the bond’s $25,000 “penal sum.” What that percentage (the premium rate) will be for a given bond depends largely on the principal’s creditworthiness, as established by the principal’s personal credit score. Other factors that may enter into the premium rate determination include the principal’s personal and business finances, industry experience, and any prior claims history.
Well-qualified principals typically pay a “standard market” premium rate, which is in the range of 1% to 3%. A principal who doesn’t qualify for the standard market rate could pay a substantially higher premium.
Request a convenient online quote today, or discuss your Indiana auto dealer bond needs with one of our experienced surety bond specialists.
