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 is set to go into effect on August 28, 2018, and there are a few differences to the current licensing process being enacted by this bill. One of the most significant differences is the substantial increase in the amount of the surety bond required of auto dealers. Previously, dealers in Missouri had to have a $25,000 surety bond to be licensed. However, SB 707 doubles the amount of the surety bond, meaning dealers will be required to get a $50,000 surety bond. Any time a new rule is enacted resulting in such a big change to the licensing process, there will undoubtedly be questions as to how that change will affect you and your dealership. More specifically, a change such as this most often leaves dealers asking the following questions:
Missouri Auto Dealer Frequently Asked Questions
Does the surety bond increase apply to me?
Yes, regardless of whether you are currently licensed as a Missouri auto dealer 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 surety bond renewal is set to take place on or after the August 28 effective date, you will automatically be quoted for the $50,000 surety bond. However, if your renewal date is before the 28th of August and you have already received your quote, you may have been quoted for the $25,000 bond. If you received a quote 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 be in compliance 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 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.
What if I decide not to increase the amount of my 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 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.
Whether you need to increase your current bond or you need a new bond, SuretyBonds.com is here to help. When you choose to work with us, you’re choosing to work with a team dedicated to getting your dealership bonded quickly and easily at the most competitive rates in the industry.