Utah Auto Dealer Bond

As a nature and outdoor wonderland, Utah is the state with the third most number of national parks. In recent years, it has seen a lot of migrations into the state. More migration means more need for vehicles. Being a dealer in Utah is very profitable. If you sell two or more cars within Utah, then you are required by The Utah Motor Vehicle Enforcement Division to register as a licensed motor vehicle dealer. To register as a licensed motor vehicle dealer, you must purchase and maintain a $75,000 “Bond of Motor Vehicle Dealer, Special Equipment Dealer, Crusher or Body Shop” as part of that licensing process. This bond is more simply known as motor vehicle dealer bond. This requirement is enforced by the Utah State Code, Chapter 3, Title 41, Section 205

Quick Overview

  • Who Needs It: motor vehicle dealers, special equipment dealer, crusher, body shop
  • Bond Amount: $75,000 for motor vehicle dealer license, $20,000 for special equipment license and body shop license, $10,000 for motorcycle, off highway vehicle or small trailer dealer, or crusher dealer license 
  • Cost: Starts at $600 for the $75,000 bond and $200 for the $20,000 bond and $100 for the $100,000 bond
Sample Payment and Performance Bond Form
Utah Auto Dealer Bond Form
Used Auto Dealer Bond

Bond Term: 1-3 years, 

Required By: Utah Motor Vehicle Enforcement Division

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1 Year Bond Starts at
1 Year Bond Price
$300
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Commonly Asked Questions: 

What Bond Do I Need? 

Here's a table with the bond amount and type of license required.

Note that a representative or consignee of a dealer is not required to file a bond as long as the dealer they work for has a bond. 

A Few Things to Note When Choosing Bonding Companies

The Utah State Code, Chapter 3, Title 41, Section 205 specifies that the bond will only be accepted if the issuing company is licensed to do business in the state and has at least a higher than B+ rating by the A.M.Best Company. 

What Is the Purpose of the Utah Auto Dealer Bond? 

The bond mainly is used to provide a financial compensation to parties engaged with the dealers (i.e., suppliers, customers) that are harmed due to fraud and fraudulent representation of the dealers. Some examples of the fraudulent actions can be listed below: 

  • failing to deliver a certificate of title or manufacturer’s certificate of origin to their customers or appropriate authorities
  • Not paying off liens on motor vehicles traded in

How Does Claim Against the Utah Motor Vehicle Dealer Bond Work? 

According to Utah State Code, Chapter 3, Title 41, Section 205, a claim can be valid only if the following two statements are true: 

(1). A written claim is submitted to the administrator within one year after the reason for the claim occurred

(2). The legal action started within two years after the claim was submitted to the administrator.

Only after six months have passed since the filing of the claim can the surety company start to determine the validity of the claim. If the claim is valid, then the surety company will pay out the principal up to the amount of the bond penal sum. The principal then would need to inform the administrator the bond has been settled. Surety bonds, different from insurance, have an indemnity clause which gives surety companies the authority to seek reimbursement from the bond principal. Therefore, the bonding company will seek to recoup their claim loss from the principal. 

What Are the Different License Classifications? 

  • Motor Vehicle Dealer License: allows licensees to sell used and new vehicles, dismantle motor vehicles and operate as a body shop 
  • Special Equipment Dealers: allows licensee to sell a new special equipment motor vehicle with a gross vehicle weight of 12,000 or more pounds after installing special equipment on the motor vehicle. It also allows licensee to operate as a body shop and dismantle motor vehicles
  • Body Shop: allows licensee to repair and restore vehicles
  • Crushers: allows licensee to shred or crush vehicles for ease of recycling 
  • Dismantler’s license
  • Salvage vehicle buyer: allows licensee to bid on or purchase a vehicle with a salvage certificate in auctions
  • Motorcycle, Off-Highway Vehicle or Small Trailer Dealers: allows licensee to sell or exchange motorcycle, off-highway vehicles or small trailer dealers. Small trailers weigh between 750 - 1,999 pounds

How To File Your Bond

You would need to file your original bond to the following address: 

Motor Vehicle Enforcement Division 
210 N 1950 W 
Salt Lake City, UT 84134

Please note that your would need to attach an notary form, formally known as “Affidavit of Qualification” form to the bond. 

How Often Do I Need to Renew My Motor Vehicle Dealer Bond?

You have the flexibility to choose the term length for your auto dealer bond. However, all Utah auto dealer bonds share a standard expiration date of June 30th. This specific date aligns with the expiration of all Utah auto dealer licenses. Consequently, a new bond or proof of continuous bond coverage must be submitted to The Utah Motor Vehicle Enforcement Division before June 30th each year. This ensures that your dealership remains compliant and licensed to operate in the state.

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