Kansas Auto Dealer Bond

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Kansas Auto Dealer Bond: A Comprehensive Guide

This guide provides information for insurance agents to help new and pre-owned car dealership owners on Kansas Auto Dealer bonds

At a Glance:

  • Lowest Cost: $120 per year or $12 per month, based on the business owner’s credit
  • Bond Amount: $30,000
  • Who Needs It: All individuals and businesses that sell or deal in 5 or more motor vehicles a year
  • Purpose: To ensure the public will receive compensation for any damages should the auto dealer fail to comply with dealer licensing law
  • Who Regulates Dealers in Kansas: The Kansas Department of Revenue (DOR)
Kansas auto dealer bond form
Kansas Vehicle Dealer Bond Form


Kansas State Statute 8-2401 mandates auto dealers operating in the state to obtain a motor vehicle dealer license with the DOR. The Kansas legislature enacted the license and regulations to ensure that dealers engage in ethical business practices and remit required taxes and fees. In order to provide financial security for the enforcement of the license law, dealers must purchase and maintain a $30,000 motor vehicle dealer surety bond to be eligible for licensure.

What is the Purpose of the Kansas Auto Dealer Bond?

Kansas requires dealers to purchase the Motor Vehicle Dealer Bond as part of the application process for the Motor Vehicle Dealer License. The bond ensures that the public will receive compensation for financial harm if the auto dealer fails to comply with the licensing regulations and that the dealer will pay all required taxes and fees to the State of Kansas. In short, the bond is a type of insurance that protects the public if the dealer breaks licensing laws.

How Can an Insurance Agent Obtain a Kansas Auto Dealer Bond?

BondExchange makes obtaining a Kansas Auto Dealer Bond easy. Simply login to your account and use our keyword search to find the “auto dealer” bond in our database. Don’t have a login? Enroll 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.

At BondExchange, our 40 years of experience, leading technology, and access to markets ensures that we have the knowledge and resources to provide your clients with fast and friendly service whether obtaining quotes or issuing bonds.

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How Much Does the Kansas Auto Dealer Bond Cost?

The $30,000 Kansas Motor Vehicle Dealer surety bond can cost anywhere between $120 to $2,400 per year. Insurance companies determine the rate based on a number of factors including your customer’s credit score and experience. We also offer easy interest-free financing for premiums over $500. The chart below offers a quick reference for the approximate bond cost on the $30,000 bond requirement.

$30,000 Kansas Auto Dealer Bond Cost

Credit Score* Bond Cost (1 year) Bond Cost (1 month)
749+ $120 $12
699 – 748 $150 $15
660 – 698 $180 $18
649 – 659 $300 $30
629 – 648 $360 $36
619 – 618 $600 $60
600 – 618 $900 $90
580 – 599 $1,200 $120
570 – 579 $1,800 $180
550 – 569 $2,100 $210
500 – 549 $2,400 $240

*The credit score ranges do not include other factors that may result in a change to the annual premium offered to your customers, including but not limited to, years of experience and underlying credit factors contained within the business owner’s credit report.

How Does Kansas Define “Motor Vehicle Dealer”?

Kansas State Statute 8-2401 defines a motor vehicle dealer as any person who “for commission, money or other thing of value is engaged in the business of buying, selling or offering or attempting to negotiate a sale of an interest in vehicles; or for commission, money or other thing of value is engaged in the business of buying, selling or offering or attempting to negotiate a sale of an interest in motor vehicles as an auction motor vehicle dealer”. Exemptions to this definition include:

  • Any person acting under a court order
  • Bank, credit union or other financial institution involved in the repossession of motor vehicles
  • Public officers performing official duties

Kansas Auto Dealer Bond

BondExchange now offers monthly pay-as-you-go subscriptions for surety bonds. Your customers are able to purchase their bonds on a monthly basis and cancel them anytime. Learn more here.

How Do Dealers Apply for a Motor Vehicle Dealer License in Kansas?

The process for applying for a motor vehicle dealer license in Kansas is pretty complex. Below are the general guidelines, but dealers should refer to the Kansas Dealer Licensing and Salesperson Handbook for details on the process.

License Period – The Kansas Dealer License expires on December 31 each year regardless of the date of issuance and must be renewed before the expiration date.

Step 1 – Determine the License Type

Kansas has 23 different dealer licenses, each with their own specific set of licensing requirements. Dealers can view a full list of all 23 licenses on page 8 of the Dealer Licensing and Salesperson Handbook. Below are the most common types of dealer licenses:

    • New/Used – Sells new and used motor vehicles
    • Used – Sells used motor vehicles only
    • Salvage – Sells parts obtained from inoperable motor vehicles
    • Wholesale – Sells motor vehicles to licensed dealers only
    • Auction – Sells motor vehicles at an auction

Step 2 – Establish a Location

Dealers are required to establish a permanent place of business that meets the following minimum requirements:

    • Owned or leased by the dealer
    • Used for commercial purposes only
    • Have an office space to conduct business and store records
    • Have a phone number listed in the business name
    • Be able to receive mail

Step 3 – Erect a Sign

Dealers must erect a permanent sign displaying the business name with letters at least 10 inches in height and visible from the nearest public street. If zoning regulations do not allow a dealer to erect a sign, verification from the local zoning authority must be submitted with the dealer’s application.

Step 4 – Obtain Zoning Approval

Dealers must contact their local zoning authority and ensure that their business location is in compliance with all zoning regulations.

Step 5 – Purchase a Surety Bond

Dealers must purchase and maintain a $30,000 motor vehicle dealer bond.

Step 6 – Acquire Insurance

Dealers are required to have insurance on their business location and all inventory. Dealers are required to purchase and maintain public liability and property damage insurance. The dealer’s insurance company must forward the insurance certificate to the DOR. The insurance certificate must be listed under the same business name and address used in the dealer license application.

Step 7 – Complete the Application

All new dealer regulatory license applications and dealer regulatory license renewal applications should be mailed to:

Kansas Department of Revenue
Attn: Dealer License
PO Box 2369
Topeka, Ks 66601-2369

Dealers must complete the Vehicle Dealer License Application, including the following steps:

    • 7.a Sales Tax Certification – Dealers must submit a copy of their sales tax registration with their application. The business name listed on the sales tax registration must be the same as listed on the dealer application. Dealers can obtain a sales tax number here.
    • 7.b Tax Clearance – Dealers must submit a tax clearance certificate with their application verifying that the dealer does not owe any taxes to the State of Kansas. Dealers can obtain a tax clearance certificate here.
    • 7.c Property Tax – The dealer’s local County Treasurer must sign the dealer’s application verifying that the dealer does not owe any personal property taxes.
    • 7.d Credit References – Sole proprietors and partnerships must submit three credit references with their application to determine the applicant’s financial fitness
    • 7.e Articles of Corporation – All business other than a sole proprietorship or partnership must submit their articles of incorporation/operation. Dealers can register their business with the Kansas Secretary of State here.
    • 7.f Dealer Plates – Dealers may request up to three initial dealer plates per plate type (car, motorcycle, trailer ect.). Dealers may request an additional dealer plate for every 5 sales they complete.
    • 7.g Franchise Agreement – New vehicle dealers must submit a copy of their franchise agreement authorizing the dealer to sell each make of model of new motor vehicle
    • 7.h Picture – Dealers must submit a picture of their business location, with their sign included, with their application

Step 8 – Pay Fees

The following fees are associated with obtaining the dealer license:

    • New/Used – $75 application fee
    • Used – $75 application fee
    • Salvage – $75 application fee
    • Wholesale – $75 application fee
    • Auction – $75 application fee
    • All Dealers
      • $275.50 fee for first dealer plate
      • $30.50 fee for additional dealer plates ($25.50 for manufactured home and trailer)
      • $350.50 fee per full use plate

The fees for all other dealer licenses can be found on the application form.

Step 9 – Complete Dealer Training

After the dealer’s application has been approved the dealer will receive an invitation to participate in a mandatory dealer training class. The class information and invitation will be sent to the email address listed on the dealer application.

How Does a Kansas Dealer Renew Their License?

The Kansas Dealer License expires on December 31 each year regardless of the date of issuance and must be renewed before the expiration date. Dealers will receive their renewal packet in early November via the email address listed on their application. The email will contain instructions on how to submit the renewal application online through the Kansas Dealer Licensing Portal.

What Are the Insurance Requirements for the Kansas Auto Dealer License?

The State of Kansas requires dealers to obtain public liability and property damage insurance (limits not specified). Dealers must file a $30,000 motor vehicle dealer bond.

How Do Kansas Auto Dealers File Their Bond?

The $30,000 surety bond requires signatures from both the surety company that issues the bond and the auto dealer. The bond form will require the following items:

  • Legal name of entity/individual(s) buying the bond
  • Business type (corporation, LLC ect.)
  • Physical address where the business will operate
  • Surety company’s name, address, phone number and signature
  • Date bond will be executed
  • Renewal date of the bond

Dealers should mail the completed bond form, including the power of attorney, to the following address:

Kansas Department of Revenue
Attn: Dealer License
PO Box 2369
Topeka, KS 66601-2369

How Can Kansas Auto Dealers Avoid Bond Claims?

To avoid claims on the Motor Vehicle Dealer Bond, dealers must follow all dealer regulations in the state, including some of the most important issues below that tend to cause claims:

  • Do not engage, or allow representatives of the business to engage, in any acts of fraud
  • Pay sellers of vehicles promptly and in full
  • Transfer all vehicle titles when sold
  • Pay taxes on time and in full. Dealers should consider setting aside tax obligations as they accrue.
  • Do not engage in any illegal selling practices

What Other Insurance Products Can Agents Offer Dealers in Kansas?

Kansas requires all dealers to obtain both public liability and property damage insurance (limits not specified). Bonds are our only business at BondExchange, so we do not issue any form of liability insurance, but our agents often utilize brokers for this specific line of business. A list of brokers in this space can be found here.

How Can Insurance Agents Prospect for Kansas Auto Dealer Customers?

Kansas unfortunately does not display motor vehicle dealer information to the public. We suggest contacting a list service company or the Kansas Secretary of State for a list of active motor vehicle dealers. Contact BondExchange for additional marketing resources. Agents can also leverage our print-mail relationships for discounted mailing services.

What Other States Require Auto Dealer Bonds?

All 50 states and the District of Columbia require auto dealers to obtain an Auto Dealer Bond as a prerequisite for licensure. Insurance agents should utilize our Main MVD Page for a detailed analysis of the Auto Dealer Bond requirements nationwide.

Kansas Auto Dealer Bond