Effective June 18, 2018, Assembly Bill 6884 requires New York automobile brokers to provide the New York Department of State – Division of Licensing Services with a $100,000 surety bond. The current requirement is $75,000 and no indication has been given as to why exactly legislators chose to increase the bond amount. In many cases, however, an increased bond amount is simply to afford more protection for consumers.
Will this increase affect me?
The Division of Licensing Services in New York defines automobile brokers as a person or person who receives a commission or fee for the arrangement or promise of arrangement in regards to the sale of an automobile. The new legislation mandates that any business meeting the Division’s definition must increase their current $75,000 bond to the newly established $100,000 amount.
Why do bond requirements change?
Surety bonds are used to protect consumers from harm resulting from the principal’s failure to comply with the terms of the surety bond. If a claim is made against the bond, the surety company will pay out up to the full amount of the bond before turning to the principal to collect reimbursement for every dollar paid out to settle the claim.
New York auto broker bond requirements are no different and allow the state of New York to hold brokers to certain industry standards. Pursuing a change to a bond requirement is done carefully, but increases are generally the result of insufficient coverage for consumer losses when claims are made against the bond.
As a New York auto broker, how do I increase my bond amount?
Past bond increases in the state of New York have only applied to new applicants while current licensees will be required to comply at the time of renewal for their bond, but New York has not yet released information about how they will be implementing the change coming in June. However, more information will become available closer to the effective date.
Changes to bond amounts are usually handled in one of two ways; the licensee may have a rider issued to increase the amount of their current bond or they may keep their current bond amount until the bond is up for renewal, at which point the licensee must obtain the $100,000 bond and submit it to the Department of State Licensing Services.
Whether you need to adjust your surety bond amount or you are looking to get licensed as a New York automobile broker for the first time, call SuretyBonds.com at 1 (800) 308-4358 or fill out an online application to get your free, no obligation surety bond quote.