What To Know About The Motor Vehicle Dealer Bond

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There are certainly many types of policies involving vehicles in the insurance business. These could range from the basic one for personal liability related to owning and driving a vehicle while others are for conducting transactions related to the automobile industry and its supporting niches. Cars and other kinds of wheeled transports are among the most coverable of items for insurance.

Bonds are a type of policy which assures that contracts are made and fulfilled in good faith, or that work is covered in the sense that it is the exact thing that is provided for in a contract. The motor vehicle dealer bond` is one such item, and it is another form of insurance policy. It is however, more about delivery than anything else.

This document does not insure against physical damage, but those damages that might result in late or non performance of certain contracted tasks or work. The government and its agencies that govern the sector for regulating motor vehicles always require a bond for businesses. The outfit which operates either as an independent or franchised car dealer will certainly need one.

The basic requirement is for having a document which can assure the DMV or any similar agency in states that you are setting up or have set up your business with good faith. And that you are not out to con or provide consumers with inferior products or services. Fraudulent transactions once were prevalent, the result of not having this kind of bond operable or in place.

Thus anyone operating a dealership today has to come up with a set of documents that formalize and legalize his status in the niche. This is to prevent anyone from committing any kind of fraud, and also regulates the field of dealerships in a way that winnows out those who cannot process such a bond. The insurance company takes care of checking backgrounds in relation to the bond.

Most of those who apply for this will have their backgrounds studied before they can have it. And this assures the government agency that this person is legit and has the capacity to provide and support a business of this kind. Dealers, too, are acknowledged by car manufacturers, even those which operate independently.

Franchised dealerships are among the most reliable of outfits, and thus the bond here is pro forma, more of a legal requirement that needs to be fulfilled. Today, there are less chances of fraud happening, but when it does, the policy in effect can help prosecute the person who does it. The insurance company thus shoulders part of the responsibility of prosecution.

The effect of violating the legal document is instant revocation of operating license or permit. And there could be a further move to ban the person from the state he is doing business in. The company who covers the policy could also access the network of national dealerships throughout other states and even the country to blacklist the wrongdoer.

Thus violations here have become something that only the most determined or wrong minded person may want to do. The penalties are severe, and these could include higher monetary penalties. Jail could be warranted for the most felonious crimes.

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