Maryland Auto Dealer Bond

A Maryland auto dealer bond, also known as a Vehicle or Trailer Dealer Bond, is a surety bond required by the Maryland Motor Vehicle Administration before your dealer license can be issued.

It is a financial guarantee that your dealership will follow Maryland vehicle dealer laws and deal honestly with customers. If you fail to do so, a harmed customer or the state can 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: Maryland Motor Vehicle Administration
  The state authority that requires the bond as a condition of licensing. In Maryland, the bond is payable for the benefit of the Administrator of Motor Vehicles and the public.
   
• 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’re officially bonded in Maryland. You’ll receive an email copy of the bond, and you can request a paper copy if necessary.

4. File your bond with the Maryland MVA

Submit the original bond as part of your dealer license application to the Maryland Motor Vehicle Administration Business Licensing and Compliance division.

Filing address:

Maryland Department of Transportation
 Motor Vehicle Administration
 Business Licensing and Compliance
 6601 Ritchie Highway N.E., Room 146
 Glen Burnie, MD 21062

The Maryland Motor Vehicle Administration requires the following dealer license applicants to file a surety bond before receiving a license.
 

• New vehicle dealers - Dealers selling new motor vehicles need a bond between $50,000 and $300,000, depending on annual sales volume. New applicants are generally subject to a minimum $50,000 bond.
• Used vehicle dealers - Dealers selling only used motor vehicles need a bond between $15,000 and $150,000, depending on annual sales volume. New applicants are generally subject to a minimum $15,000 bond.
• Wholesale dealers - Wholesalers follow the same bond schedule as used vehicle dealers, from $15,000 to $150,000 based on vehicle volume.
• Trailer dealers - Dealers selling only trailers or semitrailers 15 feet or less, or boat trailers of any size, need a $5,000 bond. Dealers selling trailers over 15 feet follow the used dealer bond schedule.
• Motorcycle and emergency vehicle dealers - These dealers must also file a bond as required by Maryland law, with the amount tied to the vehicle type and sales volume.
• Supplemental locations - A dealer bond can cover the primary location and supplemental locations if all locations are licensed under the same dealer business license number.

The bond protects the Maryland MVA and consumers from financial loss caused by dealer fraud, misrepresentation, or violations of Maryland vehicle dealer laws. 

A claim can be filed for any of the following issues:
 

• Selling a vehicle without proper title or failing to transfer title correctly
• Misrepresenting a vehicle’s condition, accident history, or mileage
• Keeping customer deposits without delivering the vehicle
• Failing to follow Maryland dealer advertising, sales, registration, or titling rules
• Any other violation of applicable Maryland dealer laws that causes financial loss

The maximum payout is limited to the bond’s penal sum. For example, if your required bond amount is $50,000, that is the maximum total liability available under the bond. 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 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 then reimburses the surety for any amount paid out
• Claims on your record can significantly increase your bond premium at renewal

Maryland dealer bonds run concurrently with the dealer license period and continue through license renewals unless the bond is canceled.

Lance Surety will contact you well in advance of your premium due date to help prevent any lapse in coverage. Bond premiums are typically paid annually, even when the license renewal period is longer.

If the surety cancels the bond, Maryland requires at least 45 days’ notice by registered or certified mail to the Administration. Once the bond is canceled, you must provide a replacement bond to stay compliant with the Maryland MVA.

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

Getting a Maryland auto dealer license is a detailed process. The Maryland MVA business licensing packet explains the required forms, license fees, location requirements, inspections, and bond forms for dealer applicants.

Most applicants need to prepare the dealer license application, business registration documents, FEIN or EIN, criminal background check authorization, zoning approval, repair facility contract, site inspection approval, dealer orientation completion, insurance documentation, fees, and the required surety bond.

You can find more details on the Maryland MVA website.

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

How long does it take to get a Maryland 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 Maryland requires the original bond with your license packet, we can also mail a paper copy.

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

The bond amount, also called the penal sum, is the maximum protection available to consumers and the state. Maryland dealer bond amounts range from $5,000 to $300,000 depending on license type and sales volume. 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 or is canceled, you are no longer properly bonded with the Maryland MVA. You may need to provide a replacement bond to keep your dealer license in good standing and avoid licensing issues.

Can my bond be cancelled?

Yes, a surety bond can be canceled. In Maryland, the surety must give the Administration at least 45 days’ notice by registered or certified mail before cancellation. If you are closing your dealership or changing surety providers, contact us so the transition is handled properly.

Does every Maryland dealer need the same bond amount?

No. Maryland dealer bond amounts depend on your license type and vehicle sales volume. New vehicle dealers have a different bond schedule than used vehicle dealers, wholesalers, and trailer dealers.

Do I need a separate bond for each dealership location?

Not always. Maryland law allows one bond to cover the primary location and supplemental locations if all locations are licensed under the same dealer business license number. If you operate under separate license numbers, confirm the bond requirement with the MVA or your surety provider.