There are a number of benefits for any auto dealership in obtaining a bond for their business.
Your bond is put in place as a friendly reminder that you need to ensure that all employees, including yourself, follow all the laws pertaining to the sales of motor vehicles or you may receive a hefty fine from the local or state government department that has issued you your dealership licence. Your bond is in place to ensure that your business has the money available should you break any of these laws and regulations.
Your auto dealer bond is not insurance, breaking the law was your choice, or the choice of one of your employees, so the financial burden still lies with you in the end. The bond issuer will pay out all costs in the short term, but will come to your business for reimbursement of all of these costs.
The biggest benefit of having a bond through a bond company is that if any claims are made against your dealership, your bond issuer will fully investigate the claim before deciding to pay any amount from your policy. If they believe the claim to be false or invalid, they will help you fight the claim in court. If however, they find the claim to be true and you, or one of your employees to have been negligent, the bond issuer will look to you to make payment on the matter. If you are unable to do this, the bond issuer will pay the amount due to the extent of your policy until you are able to repay the money to save any kind of financial hardship that may be suffered.
Your auto dealer bond covers all the people that you encounter in your day to day business. The bond is a guarantee to your customers, sellers, wholesalers, financial enterprises as well as the government agencies that will give you license to sell cars.
If for any reason you fail any of the people that you conduct your day to day business with, your bond is in place to be able to ensure that they do not suffer any financial losses due to negligence or illegal acts that was caused by your business.
There are a number of different bond policies available for automotive dealerships dependant on what you sell. In most cases you will be required to have a bond policy in place before the Department of Motor Vehicles or DMV will issue you with a license to begin operation of your business.
No matter what the name of the bond policy, they all work in the same basic fashion. If at any times you neglect to comply with the contractual terms of your bond agreement, any party that feels that they may be a victim of wrongdoing by your business may choose to lodge a claim against your bond to be reimbursed for your actions to save any financial hardship on the people your business rely on to survive.