Connecticut Auto Dealer Bond

A Connecticut auto dealer bond, formally called a Motor Vehicle Dealer Bond, is a surety bond required by the Connecticut Department of Motor Vehicles before your new or used dealer license can be issued.

It is a financial guarantee that your dealership will operate in compliance with Connecticut law and deal honestly with customers. If you fail to do so, a harmed customer can make a claim against your bond to recover their 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 is a contract between 3 parties:

• The Obligee: Connecticut Department of Motor Vehicles
  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 online. Just enter some basic information about yourself and your business, and you should be able to submit your application within a matter of minutes. If you have any questions, we are more than happy to assist you.

2. Get a Quote

At Lance Surety Bonds, we want to provide you with the best premium rate possible. For most applicants with a strong credit history, a quote is ready within minutes. 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 are officially bonded in Connecticut. You will receive an email copy of the bond, and you can request a paper copy if the DMV requires an original.

4. File your bond with the Connecticut DMV

Submit your completed Form K-158 surety bond as part of your dealer license application to the Connecticut Department of Motor Vehicles.

Filing address:

Connecticut Department of Motor Vehicles

Dealers and Repairers Licensing Unit

60 State Street

Wethersfield, CT 06161

The Connecticut Department of Motor Vehicles requires the following license types to post a surety bond before receiving or maintaining a license.
 

• New car dealers - New vehicle dealers must post a $60,000 motor vehicle dealer bond.
• Used car dealers - Used vehicle dealers must also post a $60,000 motor vehicle dealer bond.
• General repairers - General repairer licenses require a $25,000 bond.
• Limited repairers - Limited repairer licenses require a $10,000 bond.
• Motor vehicle recyclers and low speed vehicle dealers - These licenses require a $25,000 bond.
• Leasing or rental companies - Companies leasing or renting vehicles for periods of 30 days or more must carry a $15,000 bond.

The bond protects Connecticut consumers from financial loss caused by dealer fraud, negligence, or other violations of state or federal law related to the dealership business. 

A claim can be filed for issues such as:
 

• Selling a vehicle with no title, a defective title, or failing to transfer title properly
• Misrepresenting a vehicle's condition, accident history, or mileage
• Retaining customer deposits without delivering the vehicle
• Failing to follow Connecticut DMV rules or consumer protection requirements
• Any other conduct that creates grounds for suspension or revocation of the license

The maximum payout per bond is the bond's penal sum: $60,000 for new and used motor vehicle dealer licenses. After any payout, you as the principal are liable to reimburse the surety.

How the Claims Process Works?

• Consumer or claimant contacts the surety company directly or files a complaint through the appropriate Connecticut DMV process
• The surety investigates the claim to determine its validity
• If the claim is valid, the surety pays the claimant up to the bond's penal sum
• The dealer, as the principal, is then required to reimburse the surety for any amounts paid out
• Claims on your record will significantly increase your bond premium at renewal

Connecticut dealer licenses are renewed on a biennial schedule, and your bond must remain active while your license is active.

Lance Surety will contact you well in advance of your renewal date to help prevent any lapse in coverage. You must continue paying the annual premium to keep the bond active.

Connecticut dealer bonds are issued on a continuous basis, meaning the original bond remains active as long as the annual premium is paid and the surety does not cancel it. You typically will not need to file a new bond each year unless you change surety providers or the DMV requests updated proof.

At renewal, the surety company will review your credit. Maintaining a strong credit profile can help keep your premium costs low.

Getting a Connecticut auto dealer license is a detailed process. The Connecticut DMV procedure for obtaining an automotive dealer or repairer license outlines the required application forms, location requirements, inspections, sales tax permit, insurance certificate, surety bond, VIN etching filing, required signs, and applicable fees.

You can find the full checklist on the Connecticut DMV's website.

For more information on how to get the license, check our guide: Connecticut auto dealer license

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

For most applicants, bonds are issued the same day, often within minutes of completing the application. Your bond is delivered digitally by email. If the Connecticut DMV requires a paper original, we can mail it to you.

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

The bond amount, also called the penal sum, is the maximum protection offered to consumers: $60,000 for new and used Connecticut dealer licenses. 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. A $60,000 bond may cost $600 to $1,800 per year for applicants with strong credit.

What happens if my bond lapses?

If your bond lapses, you are no longer in compliance with Connecticut DMV licensing requirements and cannot legally operate as a licensed dealer. Connecticut law allows the DMV to assess an administrative fee for failing to provide proof of bond renewal or replacement on time, in addition to possible license suspension, revocation, or civil penalties.

Can my bond be cancelled?

Yes, a surety bond can be cancelled either by you or by the surety company. If the surety cancels your bond, written notice must be sent to the Connecticut DMV before the cancellation date. Once your bond is cancelled, your dealer license can fall out of compliance. If you need to cancel your bond voluntarily because you are closing your dealership, contact us directly so it can be handled properly.

Do I need a bond for every salesperson I employ?

No. Connecticut does not use the same separate auto salesperson bond structure as some states. The bond requirement applies to the licensed business, and the amount depends on the license type. Your application may still require information about owners, officers, partners, members, and responsible personnel.

Do I need a separate bond for each dealership location?

Generally yes. Connecticut DMV instructions state that a separate application must be submitted for each location if you are requesting a license for more than one location. The name and address on the bond must exactly match the business name and address on the Application for Business License.