Alabama Lost Title Bond: A Comprehensive Guide
This guide provides information for insurance agents to help their customers obtain an Alabama Lost Title Bond
At a Glance:
- Lowest Cost: $100 per year
- Bond Amount: Between $5,000 to $100,000 (more on this later)
- Who Needs it: Vehicle title applicants in Alabama who do not have adequate proof of ownership
- Purpose: To ensure the rightful vehicle owner does not suffer financial harm if the title applicant does not actually own the vehicle
- Who Regulates Lost Title Bonds In Alabama: The Alabama Department of Revenue
Background
Alabama administrative code 32-8-36 requires residents who never received or have lost their vehicle title to purchase a surety bond prior to obtaining their duplicate title. The Alabama legislature enacted the bonding requirement to ensure that the rightful vehicle owner will receive compensation if the title applicant does not actually own the vehicle. A bonded title can not be obtained for vehicles purchased as a body, parts, or without an engine.
What is the Purpose of the Alabama Lost Title Bond?
Alabama requires residents to purchase a surety bond as part of the application process to obtain a duplicate title. The bond ensures that the rightful vehicle owner will not suffer a financial loss if the title applicant is seeking to obtain the title fraudulently. If the title applicant is engaging in fraud, then the rightful vehicle owner can file a claim against the bond and receive compensation up to the full amount of the bond. In short, the bond acts as a safeguard against people attempting to obtain ownership of a vehicle through unethical means.
How Can an Insurance Agent Obtain an Alabama Lost Title Bond?
BondExchange makes obtaining an Alabama Lost Title Bond easy. Simply login to your account and use our keyword search to find the “title” bond in our database. Don’t have a login? Gain access now and let us help you satisfy your customers’ needs. Our friendly underwriting staff is available by phone (800) 438-1162, email or chat from 7:30 AM to 7:00 PM EST to assist you.
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How is the Bond Amount Determined?
The Alabama Department of Revenue dictates the bond amount must be as follows:
| Type of Vehicle | Model Years Old | Bond Amount |
|---|---|---|
| Trailers | Less than 5 | $25,000 |
| 5 – 9 | $10,000 | |
| 10 or more | $5,000 | |
| Passenger vehicles and pickup trucks | Less than 5 | $50,000 |
| 5 – 9 | $25,000 | |
| 10 or more | $10,000 | |
| Trucks, busses, and RVs | Less than 5 | $100,000 |
| 5 – 9 | $50,000 | |
| 10 or more | $25,000 | |
| Motorcycles | Less than 5 | $25,000 |
| 5 – 9 | $10,000 | |
| 10 or more | $5,000 | |
| Manufactured homes | Less than 10 | $50,000 |
| 10 or more | $25,000 |
Alabama residents seeking to obtain a duplicate title for a salvage vehicle must purchase a bond in the following amount:
- 25% of the bond amount for vehicles less than 10 model years old
- 20% of the bond amount for vehicles 10 or more model years old
Is a Credit Check Required for the Alabama Lost Title Bond?
Surety companies will not conduct a credit check for bonds that are less than $25,000. At limits over $25,000, surety companies will review the applicant’s credit standing to determine qualification for the bond. For larger bond amounts, applicants with poor credit may be subject to a higher rate. Generally, most carriers want to have an understanding as to how the applicant came to have ownership of the vehicle
How Much Does the Alabama Lost Title Bond Cost?
The Alabama Lost Title Bond costs either $100 or 1.5% of the bond amount, whichever is greater (rates may vary for bonds greater than $25,000).
Who is Required to Purchase a Bond?
If the Alabama Department of Revenue is not satisfied that the title applicant owns the vehicle, or they cannot guarantee that there are no undisclosed security interests in the vehicle, then they will require the title applicant to purchase a surety bond. The Department of Revenue will require a bonded title in the following scenarios:
- The vehicle has never been titled
- Applicant never received the title
- Previous owner never titled the vehicle
- Applicant has the title but there is an error in the title transfer
- Applicant purchased an unclaimed/abandoned vehicle and is not a bonded agent
How do Alabama Residents Apply for a Lost Title Bond?
To apply for a lost title bond, Alabama residents must complete the following steps:
Step 1 – Obtain the Required Documents
Alabama residents applying for a duplicate title must obtain the following documents and submit them with their title application:
-
- Original outstanding title with the assignment completed listing the applicant as the buyer
If the original title does not list the applicant as the buyer, then the following must be provided:
-
- Copy of the bill of sale containing the VIN, or
- Most current registration in the name of the applicant
Applicants without the original outstanding title must obtain the following documents:
-
- Copy of the bill of sale containing the VIN, or
- Most current registration in the name of the applicant
- Insurance settlement
Title applicants who cannot procure any of the above documents will not be eligible to obtain a duplicate title.
Step 2 – Complete the Bond Application
Alabama requires title applicants to complete an application to qualify for a bonded title. Title applicants can complete the application here. Once approved, the Department of Revenue will provide the title applicant with an MVT 10-1A form (more on this below).
How Do Alabama Duplicate Title Applicants File Their Bond?
Title applicants must mail their completed MVT 10-1A form to the following address:
Motor Vehicle Division/Title Section
Surety Bonds Unit
PO Box 327640
Montgomery, AL 36132-7640
Once Alabama receives the MVT 10-1A, they will email the title applicant the MVT 10-1 that needs to be completed by the surety company (BondExchange). After the surety company provides the title applicant with the completed surety bond form, the title applicant must complete the following steps:
Step 1
Sign and print their name as it appears on the MVT-1 area marked ‘principal’
Step 2
Upon completion of the MVT 10-1 by the insurance company, the owner must take the completed MVT 10-1 and the power of attorney provided by the surety company to a designated agent to make an application for title. Designated agents include County License Plate Issuing Officials.
Step 3
If the application is being obtained for a “first Alabama title” an inspection of the vehicle will be required by the designated agent
Step 4
The designated agent will return the MVT 10-1, power of attorney and application to this Department for processing
What Are the Insurance Requirements for Duplicate Title Applicants in Alabama?
Alabama requires all motor vehicle owners to purchase auto insurance with the following limits:
- $25,000 bodily injury per person
- $50,000 bodily injury per accident
- $25,000 property damage per accident
Most title applicants will need to purchase and maintain a surety bond (limits outlined above).
How Can Alabama Residents Avoid Claims Against Their Lost Title Bond?
To avoid claims against their bond, duplicate title applicants in Alabama must ensure that they are the rightful owners of the motor vehicle.
What Other Insurance Products Can Agents Offer Duplicate Title Applicants in Alabama?
Alabama requires all motor vehicle owners to purchase auto insurance. Bonds are our only business at BondExchange, so we do not issue other types of insurance, but our agents often utilize brokers for this specific line of business. A list of brokers in this space can be found here.