If you are a Missouri auto dealer or are planning to become one, it is important to be familiar with some of the upcoming changes in your industry. Senate Bill 707 will go into effect on August 28, 2018. One of the most significant differences is the substantial increase for the $25,000 surety bond amount required for licensed motor vehicle dealers in Missouri. Missouri Senate Bill 707 doubles the surety bond amount to $50,000.
Changes to licensing rules and regulations can be confusing. If you’re a licensed motor vehicle dealer in Missouri, you might find yourself asking the following questions.
Does the Missouri motor vehicle dealer bond increase apply to me?
Yes. Whether you’re currently licensed as a motor vehicle dealer in Missouri or plan to apply in the future, you must have a $50,000 surety bond on file with the Missouri Department of Revenue.
When do I have to increase my bond?
If your next surety bond renewal term occurs on or after August 28, 2018, SuretyBonds.com will automatically provide a surety bond quote and invoice for a $50,000 surety bond. If your next surety bond renewal term falls before August 28, 2018, and you’ve already received your renewal invoice, you were likely quote for a $25,000 bond. If you received a quote and renewal invoice for a $25,000 bond and your surety provider has not contacted you to requote for the new $50,000 requirement, you should contact them right away. All Missouri auto dealers must comply with the new requirement by August 28, 2018.
How will the higher bond amount affect my premium?
Due to the higher bond amount, you will most likely see your annual surety bond premium increase. You may still be approved at the same percentage of the total bond amount as the previous year, but the actual dollar amount you pay will be higher. For example, if you are a dealer in excellent financial standing and your $25,000 bond previously cost $125, you should expect your $50,000 bond to cost $250.
Do I have to increase my surety bond bond?
With the passage of Senate Bill 707, increasing your bond amount is mandatory. Failure to obtain a $50,000 surety bond or another adequate form of security* for your dealership is in direct violation with Missouri’s licensing laws for dealers and your license will be canceled. Pursuant to Chapter 301.559. of the Missouri Revised Statutes, the first instance of a person or entity acting as a vehicle dealer without a license is a class A misdemeanor and the second is a class E Felony.
*The state of Missouri also allows for dealers to provide an irrevocable letter of credit in lieu of a $50,000 surety bond. The ILOC must be issued by a bank in an amount of at least $100,000.
How do I increase my Missouri auto dealer surety bond amount?
Luckily, increasing the amount of a surety bond is a fairly simple process that—by choosing to work with a great surety bond provider—requires very little work on your part.
Current Vehicle Dealers
If you are a vehicle dealer who is currently licensed, you should be contacted by your surety bond provider with a renewal quote 60-90 days prior to the last day of your current bond’s term. By starting the process early, you are left with plenty of time to get your surety bond renewed on time. Once your renewal premium is paid, your surety provider will issue an amendment to your $25,000 bond, called a rider, that you must submit to the state to prove to them you are in compliance with the new $50,000 requirement. Riders may be uploaded electronically to the Department of Revenue website.
First-Time Dealers or Dealers Changing Surety Providers
If you are applying for a new dealer license or you are changing surety providers, you will need to apply for a new bond with the surety company. Once the surety provider receives your application and it has been reviewed and approved by an underwriter, you will be contacted with a quote for your surety bond. When your premium has been paid, your $50,000 surety bond will be mailed to you. Upon receiving your bond you must sign it and submit it to the Missouri Department of Revenue with all other application materials.
How do I get a new motor vehicle dealer surety bond in Missouri?
You can apply for a new Missouri auto dealer bond online 24/7 or call 1(800)308-4358 to speak with a surety expert about your bonding needs.