What is the difference between a Dealer Insurance Policy and a Car Dealer Bond?
With a Car Dealer Bond, there is a set limit that has been pre-determined by the DMV. 3 – 4 times per year a savvy dealer will ask me if they can get a bond with slightly more bond coverage. Although it breaks my heart to say it, the bond limit is set by the DMV and cannot be modified in one direction or the other. Again, a surety bond is required in order to get your California Car Dealer License.
An especially relevant difference between a dealer bond and dealer insurance is the deductible that is usually paid by the dealer before the insurance company will start paying their part of the claim. A dealer’s insurance premium might increase at the time of renewal if any claims were paid on their behalf. In California as of April 2018, insurance is not required nor policed by the DMV inspectors. Auctions, lenders, or property owners will mandate insurance to protect their interests. A bond is different in that the bond carrier will pay out the entire claim and then subrogate for 100% of any amount they paid on the dealer’s behalf. Simply put, if they pay a $100 claim, they will send the dealer a bill for $100 + claims administration fees.
Call Mike Ramos for Your Car Dealer Bond 714-797-5780
Call Joseph Weatherman for Your Car Dealer Education 415-730-3137