West Virginia Auto Dealer Bond: A Comprehensive Guide

September 29th, 2020

West Virginia Auto Dealer Bond

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

At a Glance:

  • Average Cost: $188 – $1,875 per year, based on the business owner’s credit
  • Bond Amount: $25,000, must expire on June 30th of each year
  • Who Needs It: All dealers who seek to buy, sell, repair, or exchange motor vehicles either directly or indirectly
  • Purpose: To ensure the public will receive compensation for financial harm if an auto dealer fails to comply with dealer licensing law
  • Who Regulates Dealers in West Virginia: The West Virginia Division of Motor Vehicles (DMV)


West Virginia Code Chapter 17A requires all vehicle dealers to obtain the appropriate vehicle dealer licenses to remain compliant with state law. Per the statutes, dealers must purchase and maintain a $25,000 surety bond to be eligible for their respective licenses.

***The $25,000 surety bond is not required for repossession institutions, manufacturers or transporters***

What is the Purpose of the West Virginia Auto Dealer Bond?

West Virginia requires dealers to purchase the Motor Vehicle Dealer Bond as part of the application process for licensure. The bond protects all purchasers, sellers, financing agencies, and government agencies from monetary loss stemming from any fraud or fraudulent representation, failure to comply with licensing law, and failure to pay required taxes and fees. In short, the bond is a type of insurance that protects the public if the dealer breaks the laws pertaining to motor vehicle dealers.

West Virginia Motor Vehicle Dealer Bond

How Can an Insurance Agent Obtain a West Virginia Auto Dealer Bond?

BondExchange makes obtaining a West Virginia 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, 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 West Virginia Auto Dealer Bond Cost?

The $25,000 West Virginia auto dealer bond costs between $188 to $1,875 for a 1 year term. 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.

$25,000 West Virginia Auto Dealer Bond Cost

Credit Score* Bond Cost (1 year)
699+ $188
680 – 698 $220
650 – 679 $250
626 – 649 $500
615 – 625 $750
600 – 624 $1,250
500 – 599 $1,875

*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 West Virginia Define “Motor Vehicle Dealer”?

Code of Virginia 17A-1-1 defines a motor vehicle dealer as “either a new motor vehicle dealer, used motor vehicle dealer, factory-built home dealer, recreational vehicle dealer, trailer dealer… motorcycle dealer…or a combination thereof and, in some instances, a new motor vehicle dealer or dealers in another state”.

How Do Auto Dealers Apply for a License in West Virginia?

The process of applying for a motor vehicle dealer license in West Virginia is pretty complex, and each license type has its own specific set of requirements. Below are the general guidelines, but dealers should refer to the DMV’s Resource Page for details on the process.

License Period – The dealer license expires on June 30th each year regardless of the date of issuance. Motor vehicle dealers must file a new bond each year to run concurrently with their dealer license.

Step 1 – Determine the License Type

West Virginia requires dealers to obtain specific licenses corresponding to the nature in which the dealer’s business operates.The most common licenses are the New/Used and Used Dealer Licenses allowing dealers to sell new and used vehicles. Information on all 14 West Virginia Dealer Licenses can be found here.

Step 2 – Request the Minimum Requirements Packet

The minimum requirements packet is a tool for dealers that details all of the specific requirements associated with applying for a dealer license in West Virginia. Dealers can call (304) 558-3584 to request a copy of the Dealer Minimum Requirements Packet.

Step 3 – Establish a Location

Dealers are required to establish a permanent business location that meets the requirements outlined in the Minimum Requirements Packet. Dealers should not buy or a sign a rental agreement for a location until they have reviewed the requirements in the packet.

Step 4 – Schedule an Initial Inspection

Once a dealer has bought or rented a permanent location they will need to contact the Office of Dealer Services at (304) 558-3584 to schedule a pre-inspection of the business location. The inspector will give the dealer the application packet at this time.

Step 5 – Purchase a Surety Bond

Dealers must purchase and maintain a $25,000 auto dealer surety bond that expires on June 30th of each year. The bond must be renewed each year and a new bond should be filed with each renewal.

Step 6 – Purchase Insurance

All dealers (except license service dealers) must acquire 20/40/10 Dealer Liability Insurance to be eligible for licensure. More on this requirement below.

Step 7 – Acquire Property Tax Receipt

Dealer must acquire either a property tax receipt or an affidavit from the county in which the dealership will be operating stating that no taxes are owed.

Step 8 – Complete the Application

Dealers can submit their application either by contacting the inspector who viewed their location to pick it up, or mail the application to the following address:

West Virginia Division of Motor Vehicles
5707 MacCorkle Ave SE
Charleston, WV 25317

The following components of the application must be included for approval:

    • 8.a Photographs – Dealers must submit photographs of their business location and proper signage as specified in the minimum requirements package.
    • 8.b Business License – Dealers must register their business with the State of West Virginia and obtain a valid business license to be eligible for the auto dealer license. Dealers can register their business here.
    • 8.c Garage Agreement – Dealers who are renting their business location must submit a garage agreement indicating they are authorized to display and park motor vehicles at their location.
    • 8.d Franchise Agreement – New motor vehicle dealer must submit a franchise agreement with their application expressing authorization from a manufacturer or distributor to sell new motor vehicles
    • 8.e Dealer Plates – First time applicants can request up to three initial dealer plates. The sales requirements for requesting additional dealer plates can be found here.

Step 9 – Wait For a Background Check

Once the dealer application is submitted, dealer services will send an inspector to conduct a background check on all owners/corporate officers of the dealership. The background check includes a criminal search, tax records, and non-deliquency of unemployment insurance.

Step 10 – Pay Fees

Dealers must pay the following fees to obtain their dealer license:

    • $150 for the Dealer Recovery Fund (first time applicants only)
    • $250 for new and used dealers
    • $250 for used only dealers
    • $250 for recreational dealers
    • $250 for trailer dealers
    • $250 for motorcycle dealers
    • $250 for manufacturers
    • $250 for transporters
    • $250 for auto auction dealers
    • $250 for wreckage dealers
    • $100 for repossessors
    • $25 for license service dealers

How Does a West Virginia Motor Vehicle Dealer Renew Their License?

The dealer license expires on June 30th each year regardless of the date of issuance. Dealers should complete a renewal application prior to the expiration date. The $25,000 motor vehicle dealer bond must be included with the application and should expire on June 30th of the following year. Dealers can mail the completed renewal form to:

Dealer Services
PO Box 17100
Charleston, WV 25317

The following fees must be paid when renewing a dealer license:

  • $100 for new and used dealers
  • $100 for used only dealers
  • $100 for recreational dealers
  • $25 for trailer dealers
  • $10 for motorcycle dealers
  • $100 for manufacturers
  • $100 for transporters
  • $100 for auto auction dealers
  • $15 for wreckage dealers
  • $100 for repossessors
  • $25 for license service dealers

What Are the Insurance Requirements for West Virginia Auto Dealers?

The State of West Virginia requires all auto dealers (except license service dealers) to maintain dealer liability insurance on all vehicles with dealer plates to remain in compliance with licensing regulations. The minimum amounts required are $20,000 single / $40,000 aggregate for bodily injury and $10,000 for property damage (20/40/10). Dealers must also file a $25,000 motor vehicle dealer bond.

How Do West Virginia Auto Dealers File Their Bond With the DMV?

The $25,000 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
  • Physical address where the business will operate
  • Surety company’s name, address and signature
  • Date on which the bond will be executed

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

West Virginia Division of Motor Vehicles
5707 MacCorkle Ave SE
Charleston, WV 25317

What Can Dealers Do to Avoid Claims Against the West Virginia Auto Dealer Bond?

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
  • 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
  • Pay all third parties for any goods or services performed
  • Adhere to the dealer license plate regulations approved by the state
  • Pay the license application and renewal fees

What Other Insurance Products Can Agents Offer Dealers in West Virginia?

West Virginia requires dealers to obtain dealer 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 West Virginia Motor Vehicle Dealer Customers?

West Virginia unfortunately does not display motor vehicle dealer information to the public. We suggest contacting a list service company or the West Virginia 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.