Nevada Auto Dealer Bond: A Comprehensive Guide
October 7th, 2020
This guide provides information for insurance agents to help new and pre-owned car dealership owners on Nevada Auto Dealer bonds
At a Glance:
- Average Cost: $450 – $5,600 per year for the $100,000 bond, based on the business owner’s credit
- Bond Amount:
- $100,000 for new and used motor vehicle dealers
- $50,000 for motorcycle/trailer only dealers
- $10,000 for utility/boat trailer only dealers
- Who Needs It: All individuals or business entities who sell or deal in motor vehicles either directly or indirectly
- 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 Nevada: The Nevada Department of Motor Vehicles (DMV)
Nevada Revised Statutes 482 mandates auto dealers operating in the state to obtain a motor vehicle dealer license with the DMV. The Nevada 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 either a $10,000, $50,000 or $100,000 motor vehicle dealer surety bond to be eligible for licensure.
What is the Purpose of the Nevada Auto Dealer Bond?
Nevada 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 Nevada. 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 Nevada Auto Dealer Bond?
BondExchange makes obtaining a Nevada 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.
How Much Does the Nevada Motor Vehicle Dealer Bond Cost?
The $100,000 Nevada Motor Vehicle Dealer surety bond can cost anywhere between $450 to $5,600 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 $100,000 bond requirement.
$100,000 Nevada Auto Dealer Bond Cost
|Credit Score*||Bond Cost (1 year)|
|699 – 748||$700|
|690 – 699||$800|
|649 – 689||$900|
|629 – 648||$1,000|
|619 – 628||$1,250|
|600 – 618||$1,400|
|580 – 599||$2,000|
|570 – 579||$3,200|
|500 – 569||$5,600|
*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 Nevada Define “Motor Vehicle Dealer”?
To paraphrase Nevada statute 482.020, a motor vehicle dealer is anyone who sells, exchanges, repairs or manufactures motor vehicles either directly or indirectly. Exemptions to this definition are:
- Any representative or person acting under a lawful court order
- Any person disposing of no more than two personal vehicles in a 12 month period for their own private use
- Licensed vehicle salespeople
- People who sell vehicles outside of the US if this only accounts for 5% of their total revenue
- Anyone who solely sells kit trailers
How Do Auto Dealers Apply for a License in Nevada?
Dealers in Nevada must navigate several steps to secure their motor vehicle dealer license. Below are the general guidelines, but dealers should refer to the application form for details on the process.
License Period – The Nevada dealer license is valid for one year from the date of issuance and must be renewed prior to the expiration date.
Step 1 – Determine the License Type
Nevada requires dealers to obtain specific licenses corresponding to the nature in which the dealer’s business operates. Keep in mind that dealers will need to acquire a license for each type of business they wish to operate. Below are the different types of the Nevada Dealer License.
- Dealer – Sells new or used motor vehicles to the public
- Distributor – Sells new motor vehicles wholesale
- Lessor – Leases motor vehicles
- Rebuilders – Modifies or repairs motor vehicles
- Broker – Acts as an intermediary between the buyer and seller
Step 2 – Purchase a Surety Bond
Dealers must purchase and maintain either a $10,000, $50,000 or $100,000 motor vehicle dealer surety bond
Step 3 – Establish a Location
Before dealers can obtain their dealer license they must first buy or lease a permanent business location. The location must meet the following requirements:
- Fully enclosed building
- Contains an office
- Display lot large enough for at least one vehicle
- Have clearly marked boundaries
Step 4 – Erect a Sign
Dealers must place a permanent sign on their business location that contains the name of the business in letters at least eight inches in height and formed by lines at least one inch wide. The sign must be visible from the nearest public street.
Step 5 – Pass Inspection
Dealers must contact the DMV and schedule an on-site inspection of their business location ensuring the location complies with the requirements outlined in Step 3.
Step 6 – Obtain Insurance
Dealers are required to submit their policy number for the state mandated comprehensive liability insurance as part of their application. The insurance amounts differ for each dealer type, and applicants should consult form OBL273 to determine their required limits.
Step 7 – Complete the Application
All new dealer regulatory license applications and dealer regulatory license renewal applications should be mailed to:
Occupational and Business Licensing (OBL)
555 Wright Way
Carson City, Nevada 89711
- 7.a Personal History Questionnaire – Applicants must fill out the personal history questionnaire section on their application form. This questionnaire requires the applicant to divulge personal information such as their social security number and employment history
- 7.b Fingerprints – Each principal applicant must provide the DMV with a set of fingerprints when submitting their application. Applicants can contact their local law enforcement agency to acquire their fingerprints. Applicants also need to fill out the waiver form on the application authorizing a background check
- 7.c Business License – All applicants must register their business with their local city or county and submit a copy of their business license
- 7.d FEIN – Dealers must submit their Federal Employer Identification Number to the Nevada DMV. Dealers can obtain an FEIN here.
- 7.e Photographs – Applicants are required to submit two color photographs of the exterior of their business location, including their sign.
- 7.f Franchise Agreement – New vehicle dealers must complete the Franchise Agreement Form indicating they have permission to sell new vehicles.
- 7.g Manufacturer Authorization – Motor Vehicle Manufacturers must submit a Letter of Verification from SAE International substantiating their WMI assignment.
Step 8 – Pay Fees
The following fees must be paid when submitting the dealer application:
- $125 new license fee
- $40.25 fingerprint processing fee per principle
- $1 technology fee
How Does a Nevada Motor Vehicle Dealer Renew Their License?
The Nevada dealer license is valid for one year from the date of issuance and must be renewed prior to the expiration date. Dealers can renew their license through the DMV’s licensing portal located here.
What Are the Insurance Requirements for the Nevada Dealer License?
The State of Nevada requires dealers to maintain automobile liability insurance on all vehicles with dealer plates with limits dependent upon the license type. Dealers must also file either a $100,000, $50,000 or $10,000 motor vehicle dealer bond.
How Do Nevada Auto Dealers File Their Bond?
The $100,000, $50,000, and $10,000 surety bonds all require signatures from both the surety company that issues the bond and the auto dealer. The bond form will require the following items:
- License Type
- Legal name and location of entity/individual(s) buying the bond
- Bond amount
- Surety company’s name, address, phone number and signature
- Date on which the bond will be executed
- Date the bond is signed
Dealers should mail the completed bond form, including the power of attorney, to the following address:
Occupational and Business Licensing (OBL)
555 Wright Way
Carson City, Nevada 89711
How Can Nevada 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 Nevada?
Nevada requires dealers to obtain comprehensive liability insurance on all vehicles with dealer plates. Most reputable dealers that provide towing or service station services should also obtain garage keepers liability. 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 Nevada Auto Dealer Customers?
Nevada conveniently provides a public database to search for active motor vehicle dealers in the state. The database can be accessed on the DMV site here. 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.