Hawaii Auto Dealer Bond

A Hawaii auto dealer bond, formally called a Motor Vehicle Dealer License Bond, is a surety bond used as an alternative form of security for certain dealer and auction applicants when the required line of credit cannot reasonably be obtained.

The bond is required by the Hawaii Motor Vehicle Industry Licensing Board and protects customers, county treasurers, and the state if a licensed dealer violates Hawaii motor vehicle dealer laws.

It is a financial guarantee that your dealership will comply with Hawaii law and deal honestly with customers. If you fail to do so, a harmed customer, the Board, the Director of Commerce and Consumer Affairs, or the county treasurer may be able to recover against the bond.

Unlike insurance, which protects you, a surety bond primarily protects the public 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: Hawaii Motor Vehicle Industry Licensing Board and the county treasurer
  The state and county authorities that require 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 to 48 hours.

3. Purchase Your Bond

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

4. File Your Bond With the Proper Hawaii Authority 

Submit your completed bond form with your dealer license application to the Hawaii Department of Commerce and Consumer Affairs, Professional and Vocational Licensing Division. The Hawaii bond form must be completed and notarized by both the applicant and the surety.

Filing address:

Hawaii Department of Commerce and Consumer Affairs

Professional and Vocational Licensing Division

HRH King Kalakaua Building

335 Merchant Street, Room 301

Honolulu, HI 96813

Phone: (808) 586-3000

The Hawaii Motor Vehicle Industry Licensing Board requires dealer applicants to provide a qualifying inventory or flooring line of credit. When that line of credit cannot reasonably be obtained, the Board may accept a surety bond in one of the following amounts.
 

• New vehicle dealers - A $50,000 bond applies if selling fewer than 10 new motor vehicle units per month, and a $200,000 bond applies if selling 10 or more new units per month.
• Used vehicle dealers - A $25,000 bond applies if selling fewer than 60 used motor vehicle units per month, and a $100,000 bond applies if selling 60 or more used units per month.
• Motorcycle and motor scooter dealers - A $10,000 bond applies to motorcycle and motor scooter dealers.
• Motor vehicle auctions - Auction applicants may need a $200,000 surety bond if the required secured line of credit cannot reasonably be obtained.
• Dealer branch locations - Branch locations are separately licensed, so check the Board’s requirements before filing if you operate from more than one location.
• Salespersons - Hawaii salespersons need the proper salesperson license and dealer employment documentation, but this page covers dealer and auction bonds, not a separate salesperson bond.

The bond protects consumers and public authorities from financial loss caused by dealer fraud, misrepresentation, title problems, or other improper business conduct. A claim can be filed for any of the following violations:
 

• Selling, purchasing, or negotiating for the purchase of motor vehicles through fraud or misrepresentation
• Failing to satisfy judgments based on representations or warranties made during a retail sale or purchase negotiation
• Causing a loss due to a title defect or undisclosed encumbrance
• Improperly procuring vehicle registration or transfer of registration
• Any other breach of Hawaii Revised Statutes Chapter 437 or related Board rules

The maximum payout per bond is the bond's penal sum. After any payout, you as the principal are liable to reimburse the surety.

How the Claims Process Works?

• Consumer, county treasurer, Board, or other claimant contacts the surety company directly to file a claim
• 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 is then required to reimburse the surety for any amounts paid out
• Claims on your record can significantly increase your bond premium at renewal

Hawaii motor vehicle industry licenses must be renewed by June 30 of every even-numbered year. If a license is not renewed by the expiration date, it is forfeited, and the licensee may have to reapply as a new applicant.

Hawaii dealer bonds are continuous until canceled, but the premium is usually paid annually. If the premium is not paid, the surety may cancel the bond.

The surety company can cancel the bond by giving 30 days’ written notice to the obligees and the principal. Once the bond is canceled, your dealer license may no longer be compliant.

Lance Surety will contact you well in advance of your renewal date to help prevent any lapse in coverage. At renewal, the surety company may review your credit and claims history, so maintaining a strong credit profile can help keep your premium costs low.

Getting a Hawaii auto dealer license is a detailed process handled by the Hawaii Department of Commerce and Consumer Affairs, Professional and Vocational Licensing Division. Dealer license and bond requirements are established under HAR Chapter 86, HRS Chapter 437, and HRS Chapter 436B.

When applying for a Hawaii dealer license, you may need to submit the dealer or auction application, surety bond form or line of credit, self-inspection report, zoning compliance, premises photos, lease documents, financial statement, entity documents, trade name documents, licensed salesperson information, sales and service agreements for new vehicle dealers, repair facility information, and required fees.

You can find the official dealer and auction application requirements on the Hawaii DCCA website.

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

How long does it take to get a Hawaii 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, and you can request a mailed copy if you need an original for filing.

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

The bond amount is the maximum protection available to claimants. In Hawaii, dealer bond amounts range from $10,000 to $200,000. This is not what you pay. The bond premium is your annual cost, which is usually a small percentage of the bond amount.

What happens if my bond lapses?

If your bond lapses or is canceled, your dealer license may no longer meet Hawaii licensing requirements. You should renew the premium before the due date and respond quickly to any cancellation notice from the surety.

Can my bond be cancelled?

Yes. A surety bond can be canceled by the surety company, usually for non-payment or risk changes. In Hawaii, the surety must give 30 days’ written notice to the obligees and the principal before cancellation takes effect.

Do I need a bond for every salesperson I employ?

No separate salesperson bond is listed for Hawaii dealer licensing. Salespersons must be properly licensed and may only be employed by one dealer at a time, but the bond requirement discussed here applies to dealer and auction applicants.

Do I need a separate bond for each dealership location?

Hawaii branch locations are separately licensed, and the bond form identifies the county where the business is conducted. If you operate multiple locations or counties, confirm the filing requirements with the Hawaii Motor Vehicle Industry Licensing Board before submitting your bond.