Overview of Kentucky Auto Dealer Bond Requirements
The auto dealer bond that applicants for one of the many auto dealer licenses in Kentucky must provide is intended to serve as a guarantee that they will comply with all the requirements set out in Chapter 190 of the Kentucky Revised Statutes (KRS).
This bond is an agreement between the dealer, the Kentucky Motor Vehicle Commission and the surety. It guarantees that if a dealer does not comply with the KRS, and thereby causes damages or losses to any party, a claim can be filed against their bond to receive compensation for such damages or losses.
When a claim against a bond is made, and a court adjudication determines that a compensation is due under the bond (as specified in KRS 190.030(9)), the surety company may extend compensation to claimants up to the full bond amount, also known as the penal sum of the bond.
The minimum bond amount for this bond is $15,000 and the maximum $100,000.
Bond: Motor Vehicle Dealer Bond
Obligee: Motor Vehicle Commission
Obligee Address: 105 Seahorse Road, Suite 1, Frankfort, Kentucky 40601
Required Expiration Date of Dealer Bond: N/A
Surety Bond: Not Continuous, Requires Continuation Certificate
Bond Form Revision Date: N/A
Dealer licenses in Kentucky expire yearly on December 31 and must be renewed before the expiration date.
Want to know more about bonds? Our ‘What is a surety bond’ guide explains how bonds work in great detail. Have a look!
See the sections below for more information regarding the cost of your bond, getting a bond with a lower credit score, why claims are filed against bond, and how to get bonded today.
If you want to know more about the bonding requirements for dealers in Kentucky, call us at (866)-450-3412!
Cost of Getting Bonded
The cost of your surety bond is a percentage of your bond amount. The Motor Vehicle Commission will determine the amount of your bond (between $15,000 and $100,000) when you apply for your bond. Once you know the bond amount, you can apply with a surety to get bonded.
The surety will offer you a rate, the cost of your bond, at which you can get bonded. This rate is based on your personal credit score, as the most important factor, as well as on things like your financial statements, liquidity, as well as professional experience.
Applicants who have a high score, one of 700 FICO or more, are typically offered a low rate, one between 1% and 2% of the total bond amount.
Say you have to obtain a $20,000 bond are offered a 2% rate on your bond. This means, your bond cost will be $400.
If you want to know exactly how much your bond will cost, complete the bond application form and we will provide you with an entirely free bond quote, without any additional obligations!
Getting Bonded With Bad Credit
Not all applicants have perfect scores, but this does mean you can’t get bonded if your credit score is low!
Our Bad Credit Program is designed to make bonds available to those applicants who currently have low or nonexistent credit, but still require a bond.
Thanks to our program you can get bonded with the same ease as you would with a high credit score. The only significant difference is that rates under this program are adjusted to make up for the increased risk that sureties assume when issuing bonds to applicants with lower scores. That’s why rates under this program are slightly higher.
How much exactly your bond will cost is determined on a case-by-case basis. Visit the program page for more information and to request a free quote on your bond!
Claims Against Your Bond
190.033(1) of the KRS states that the bond required of auto dealers is to provide public liability and property damage coverage that result from the operation of cars that are owned or offered for sale by the dealership.
If a dealer is found to be in violation of these conditions, a claim can be filed against their bond. This happens when claimants file a complaint with the Motor Vehicles Commission which then investigates the case. If there is cause for a claim, it may file a claim against the bond. The KRS explicitly states, though, that the penalty of this bond is only invoked after a court adjudication.
If this does occur, the bonded dealer is liable. The surety may provide some compensation at first, but the car dealer is ultimately responsible for reimbursing all costs incurred, include legal fees.
Since claims can be complicated and costly to deal with, dealers are always advised to strictly comply with all legal requirements. This is the most straightforward way to avoid bond claims.
Apply for Your Bond in Kentucky Now!
Want to apply for your bond? Complete our application form, and we’ll shortly provide you with an exact bond quote and further details about completing your application.
Once we receive your complete application, your bond will be issued within two working days. As soon as your bond is issued we will forward it to you by standard mail. We will also provide you with a digital copy.
You can call us at (866)-450-3412 if you have any questions regarding this bond or the bonding process!