Montana Auto Dealer Bond

A Montana auto dealer bond, also known as a Motor Vehicle Dealer Bond, is a surety bond required by Montana Motor Vehicle Division before certain dealer licenses can be issued. 

It is a financial guarantee that your dealership will follow Montana law and deal honestly with customers. If you fail to do so, a harmed customer may be able to make a claim against your bond to recover losses.

Unlike insurance, which protects you, a surety bond primarily protects your customers and the state. If a valid claim is paid out, you are responsible for reimbursing the surety company.

Every surety bond is a contract between 3 parties:

• The Obligee: Montana Motor Vehicle Division
  The state authority that requires the bond as a condition of licensing. They set the bond amount and terms.
• The Principal: You, the dealer
  You purchase the bond and are bound by its terms. If a valid claim is paid, you must reimburse the surety.
• The Surety: such as Lance Surety Bonds
  We underwrite the bond and guarantee payment to claimants up to the bond amount if you default on your obligations.

1. Submit Your Bond Application

You can apply for your bond through our online application form. Just enter some basic information about yourself, your business, and the type of dealer bond you need.

2. Get a Quote

At Lance Surety Bonds, we want to provide you with the best premium rate possible. For most applicants with strong credit, a quote can be ready quickly. More complex applications may take up to 24 hours.

3. Purchase Your Bond

Once you receive your quote, you can pay the bond premium and you’re officially bonded in Montana. You’ll receive an email copy of the bond, and you can request a paper copy if necessary.

4. File Your Bond with the Montana Motor Vehicle Division

Submit your bond as part of your Montana dealer license application. All dealer forms are available through the Montana Motor Vehicle Division website.

Filing address:

Montana Motor Vehicle Division
Title and Registration Bureau
1003 Buckskin Drive
Deer Lodge, MT 59722-2375

Montana law requires a license for a person or business that buys, sells, exchanges, accepts on consignment, or acts as a broker for covered vehicles that are not registered in that person’s name. The law also lists new dealers, used dealers, brokers, auto auctions, and wholesalers as license types. You can review the state requirements in Montana Code Annotated 61-4-101.

The Montana Motor Vehicle Division requires the following bond amounts:

• New and used vehicle dealers - A $50,000 bond is required.
• Broker-dealers - A $50,000 bond is required.
• Wholesale dealers - A $50,000 bond is required.
• Auto auction dealers - A $50,000 bond is required.
• Motorcycle or quadricycle dealers - If your business is restricted to motorcycles or quadricycles, a $15,000 bond is required.
• Boat, personal watercraft, snowmobile, and off-highway vehicle dealers - If your business is restricted to these vehicles, a $5,000 bond is required.
• Multiple dealership locations - If you maintain more than one established place of business, you must file a separate license application for each location and qualify separately.

The bond protects consumers from financial loss caused by unlawful dealer conduct. In Montana, a person who suffers loss or damage because of the unlawful conduct of a licensed dealer, broker, wholesaler, or auto auction must obtain a court judgment before collecting on the bond. The judgment must state the specific loss amount and show that the licensee’s unlawful conduct caused the loss. You can review the claim rule in Montana Code Annotated 61-4-126.

A claim can involve issues such as:

• Misrepresenting a vehicle’s condition, mileage, or history
• Failing to transfer the title properly
• Taking payment or deposits without delivering the vehicle
• Violating Montana dealer licensing laws
• Other unlawful conduct that causes customer financial loss

How the Claims Process Works?

• Consumer or claimant suffers a financial loss
• The claimant obtains a court judgment against the dealer, broker, wholesaler, or auto auction
• The judgment must state the loss amount and show the unlawful conduct caused the loss
• The surety pays the claimant up to the bond’s penal sum if the claim is valid
• The dealer must reimburse the surety for any amount paid
• Claims on your record can increase your bond premium at renewal

Montana dealer bonds must be renewed annually. State law says all dealer bonds must be approved by the department, filed in its office, and renewed every year. You can review this requirement in Montana Code Annotated 61-4-101.

Montana also requires dealers to submit an annual report on or before the 15th day of the month before the dealer license expiration month. The annual report generally requires a $30 filing fee. The annual report rule is listed in Montana Code Annotated 61-4-124.

Lance Surety will contact you before your renewal date to help prevent any lapse in coverage.

If the annual report and required fees are not filed, Montana may restrict dealer or demonstrator plates, title transfers, and temporary registration permit authority, and may begin action to revoke the license.

Getting a Montana auto dealer license is a detailed process handled by the Montana Motor Vehicle Division.

You will need to choose the right license type, submit your application, provide owner and business information, meet location and zoning requirements, show general liability insurance, and file the correct surety bond. Montana law also requires a permanent nonresidential building, location details, zoning or business permitting evidence, and a diagram or photos of the place of business. You can review these requirements in Montana Code Annotated 61-4-101.

You can find the full forms and instructions on the Montana Motor Vehicle Division dealer services page.

How long does it take to get a Montana dealer bond?

For most applicants, bonds can be issued the same day. Your bond is delivered digitally by email, and a paper copy can also be sent if needed.

What is the difference between the bond amount and the bond premium?

The bond amount is the maximum protection offered to consumers. For most Montana dealer licenses, this is $50,000. This is not what you pay. The bond premium is the annual cost you pay to purchase the bond, which is a percentage of the bond amount.

What happens if my bond lapses?

If your bond lapses, you are no longer meeting Montana’s bond requirement. Dealer plates, demonstrator plates, identification cards, and temporary registration permit authority may be affected until the bond requirement is satisfied. If the issue is not corrected, the state may begin action to revoke your license.

Can my bond be cancelled?

Yes, a surety bond can be cancelled by you or by the surety company. If your bond is cancelled and not replaced, your dealer license may no longer be in compliance with Montana law.

Do I always need a $50,000 Montana auto dealer bond?

No. A $50,000 bond applies to most dealer, broker, wholesaler, and auto auction licenses. If your business is restricted to motorcycles or quadricycles, the bond is $15,000. If your business is restricted to motorboats, personal watercraft, snowmobiles, or off-highway vehicles, the bond is $5,000.

Do I need a separate bond for each dealership location?

Montana requires a separate license application for each established place of business. Since the bond is tied to licensing, you should confirm the bond requirement for each licensed location with the Montana Motor Vehicle Division or your surety provider.