Virginia Auto Dealer Bond

A Virginia auto dealer bond, formally called a Motor Vehicle Dealer Bond, is a surety bond required by the Virginia Motor Vehicle Dealer Board before an original dealership license can be issued.

It is a financial guarantee that your dealership will operate in compliance with Virginia 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 eligible 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: Virginia Motor Vehicle Dealer Board
  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’re officially bonded in Virginia. 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 Virginia Authority 

Submit the original, signed MVDB 2 Motor Vehicle Dealer Bond form as part of your dealer license application to the Virginia Motor Vehicle Dealer Board.

Filing address:

Motor Vehicle Dealer Board

2201 W. Broad St #104

Richmond, VA 23220

The Virginia Motor Vehicle Dealer Board requires original motor vehicle dealer license applicants to post a $50,000 surety bond. Under Virginia law, the bond must remain in effect for three consecutive years from dealership opening.
 

• Original motor vehicle dealer applicants - New dealer applicants must file a $50,000 bond before the Board issues the original license.
• Franchise dealers - Dealers selling new vehicles under a franchise agreement still need to meet the Virginia dealer licensing and bond requirements.
• Independent and used vehicle dealers - Used vehicle dealers, including those selling qualifying trailers, motorcycles, RVs, or other covered motor vehicles, generally need the same $50,000 bond when applying for an original license.
• Additional licensed locations - If you open an additional dealership location, confirm the bonding and licensing paperwork required by MVDB before submitting the application.
• Renewal dealers choosing continuous bonding - After three claim-free years, a renewal dealer may choose a continuous $100,000 bond instead of participating in the Motor Vehicle Transaction Recovery Fund.
• Salespersons - Virginia requires salespeople to be licensed, but it does not require a separate salesperson bond like some other states do.

The bond protects consumers from financial loss caused by dealer fraud, fraudulent representation, or violations of Virginia dealer law. The Motor Vehicle Transaction Recovery Fund also reimburses eligible consumers in certain situations involving licensed or registered dealers and salespersons.

A claim may involve any of the following violations:
 

• Fraud or fraudulent representation in connection with the purchase or lease of a motor vehicle
• Violating Virginia motor vehicle dealer licensing laws in connection with a vehicle transaction
• Losses involving a dealer salesperson acting within the scope of employment
• Certain unpaid judgments tied to eligible extended service contract issues
• Any other conduct covered under Virginia dealer bond and Motor Vehicle Transaction Recovery Fund rules

For the $50,000 original dealer bond, the surety's aggregate liability is capped at the bond amount. 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 or follows the MVDB claim process, depending on whether the dealer is currently bonded
• The surety investigates the claim to determine its validity
• If the claim is valid, the surety pays the claimant up to the limits allowed by the bond and Virginia law
• 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

Virginia requires original motor vehicle dealer license applicants to maintain the $50,000 bond for three consecutive years from dealership opening.

Lance Surety will contact you well in advance of your renewal date to help prevent any lapse in coverage. If your bond is still required, renew it before your license paperwork is due.

The Motor Vehicle Dealer Board mails renewal materials about 30 days before expiration. Renewal paperwork must be postmarked no later than the last day of the month in which the license expires to avoid a late fee. Applications received more than 30 days late may be treated as a new original application.

After three claim-free years, a renewal dealer may no longer need the $50,000 bond if the dealer continues participating in the Motor Vehicle Transaction Recovery Fund and pays the annual fund fee. A dealer that elects not to participate in the fund must maintain a continuous $100,000 bond.

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 Virginia auto dealer license is a detailed process. The Virginia Motor Vehicle Dealer Board outlines the steps to complete before your license is issued, including business registration, dealer type selection, zoning, location requirements, salesperson licensing, your surety bond, required forms, fees, and opening inspection.

The core documents include the MVDB 2 bond form, MVDB 9 dealer plate application, MVDB 10 dealer license application, MVDB 19 zoning certification, MVDB 61 salesperson application, a compliant buyer’s order, SCC documentation, and applicable fees.

Virginia location rules also require an established place of business, including dedicated office space, records kept on site, utilities, signage, posted business hours, and enough display space for at least 10 vehicles.

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

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

For most applicants, bonds can be issued the same day after the application is completed and the premium is paid. If your application requires additional underwriting review, it may take longer.

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

The bond amount is the maximum protection required by Virginia. For original dealer applicants, that amount is $50,000. The bond premium is what you pay each year to purchase the bond, often between $500 and $5,000 depending on credit and underwriting factors.

How long must I keep a Virginia auto dealer bond?

Virginia requires original dealer license applicants to keep the $50,000 bond in effect for three consecutive years from dealership opening. After three claim-free years, renewal dealers may no longer need that bond if they continue participating in the Motor Vehicle Transaction Recovery Fund.

What happens if my bond lapses?

If your bond lapses while it is required, you are no longer compliant with Virginia dealer licensing rules. The Motor Vehicle Dealer Board may suspend your license during any period when a sufficient bond is not on file.

Do I need a bond for every salesperson I employ?

No. Virginia requires each dealership salesperson to be licensed, but it does not require a separate salesperson bond. Claims may involve a dealer or salesperson acting within the scope of employment under the dealer bond and the Motor Vehicle Transaction Recovery Fund rules.

Do I need a separate bond for each dealership location?

If you open an additional licensed dealership location, the Motor Vehicle Dealer Board may require bonding and licensing documentation for that location. Confirm the requirement with MVDB before submitting a new or additional location application.