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M. BURR KEIM AGENCY · License & Permit Surety Bonds · Reviewed November 2026

Franchise and New Motor Vehicle Dealer Bond

A franchise or new motor vehicle dealer bond is a surety bond required by many states before a new car or franchise dealership can be licensed. It protects buyers and the state against certain losses caused by a dealer’s failure to comply with motor vehicle dealer laws.

Apply for This Bond Online How to Apply Questions

At a glance

Product
Franchise and New Motor Vehicle Dealer Bond
Category
License & Permit Surety Bonds
Required amount
State motor vehicle dealer licensing laws set the bond amount. Some states require $250,000 or more for a new vehicle dealer, while others use a lower amount or a schedule based on the number of dealership locations or plates. Confirm the amount and obligee with the state dealer board.
Online issue
Instant issue up to $250,000 for single or aggregate lines. If the state requires a specialized bond form or the applicant’s credit falls outside the instant-issue guidelines, the application may need underwriting review.
Term
Dealer bonds are usually written for a one-year term and renewed with the dealer license. Some states require a bond that runs for the full license period or a continuous term. Follow the state dealer board’s instructions.

Who needs a franchise and New Motor Vehicle Dealer Bond?

  • Franchise dealerships applying for a state new motor vehicle dealer license.
  • Dealer groups adding a new franchise location or renewing a dealer license that requires a bond.
  • Owners or compliance staff confirming the bond amount and obligee required by a state motor vehicle board.

Why is a franchise and New Motor Vehicle Dealer Bond required?

State motor vehicle boards license new vehicle dealers to protect consumers and enforce dealer laws. The bond gives buyers and the state a recovery source when a dealer fails to deliver title, misrepresents a vehicle, or fails to meet other covered obligations.

The bond is required as a condition of the dealer license and does not replace garage liability, property insurance, or the dealer’s own compliance procedures.

How much bond do I need?

State motor vehicle dealer licensing laws set the bond amount. Some states require $250,000 or more for a new vehicle dealer, while others use a lower amount or a schedule based on the number of dealership locations or plates. Confirm the amount and obligee with the state dealer board.

Instant issue up to $250,000 for single or aggregate lines. If the state requires a specialized bond form or the applicant’s credit falls outside the instant-issue guidelines, the application may need underwriting review.

Bond amount is not the premium. The required amount is the maximum the surety could pay under the bond. The premium you pay is a separate charge based on the bond amount, the risk, the term, and your credit. The online application shows the premium before you bind coverage.

How much does a franchise and New Motor Vehicle Dealer Bond cost?

Premium depends on the bond amount, the state, the license term, and the applicant’s credit. A $250,000 dealer bond is typically priced as a small percentage of the bond amount. Apply online for the current premium.

How to apply online

  1. Confirm the bond amount and obligee. Use the amount and legal name of the agency, court, client, or government entity that requires the bond. The obligee name must match the requiring party’s records.
  2. Gather the application information. Have the legal business or entity name, address, license or case number, ownership information, and the required bond amount ready.
  3. Start the CNA Surety application. Use the online application link on this page. The link includes the M. BURR KEIM AGENCY app code and agency code, so the application is routed to our agency.
  4. Pay the premium and bind coverage. If the bond is eligible for instant issue, the application will show the premium and let you complete the purchase online. Otherwise, the surety will review the application and contact you if additional information is needed.
  5. File the bond. Provide the issued bond to the agency, court, client, or government entity that requires it, and keep a copy for your records.
Apply for This Bond Online All Bonds

Franchise and New Motor Vehicle Dealer Bond term and renewal

Dealer bonds are usually written for a one-year term and renewed with the dealer license. Some states require a bond that runs for the full license period or a continuous term. Follow the state dealer board’s instructions.

Good to know

  • Some states require the bond to be filed with the dealer licensing agency, while others require the dealer to keep the bond and provide proof. Check the licensing instructions before applying.
  • If you operate multiple franchise locations, confirm whether the state requires a separate bond for each location or a single bond covering all locations.

Franchise and New Motor Vehicle Dealer Bond questions

A franchise or new motor vehicle dealer bond is a surety bond required by many states before a new car or franchise dealership can be licensed. It protects buyers and the state against certain losses caused by a dealer’s failure to comply with motor vehicle dealer laws.

Franchise dealerships applying for a state new motor vehicle dealer license. Dealer groups adding a new franchise location or renewing a dealer license that requires a bond. Owners or compliance staff confirming the bond amount and obligee required by a state motor vehicle board.

Premium depends on the bond amount, the state, the license term, and the applicant’s credit. A $250,000 dealer bond is typically priced as a small percentage of the bond amount. Apply online for the current premium.

State motor vehicle dealer licensing laws set the bond amount. Some states require $250,000 or more for a new vehicle dealer, while others use a lower amount or a schedule based on the number of dealership locations or plates. Confirm the amount and obligee with the state dealer board. Instant issue up to $250,000 for single or aggregate lines. If the state requires a specialized bond form or the applicant’s credit falls outside the instant-issue guidelines, the application may need underwriting review.

Apply online through CNA Surety using the application link on this page. The link includes the M. BURR KEIM AGENCY app code and agency code, so the application is routed to our agency. Complete the application, pay the premium online if the bond is eligible for instant issue, and then file the bond with the agency, court, or client that requires it.

They are often separate license categories. Some states use the same bond form and amount for both, while others set different requirements for new vehicle dealers, used vehicle dealers, and wholesale dealers. Confirm the license category with the state dealer board.

The premium is based on the bond amount, the state, the license term, and the applicant’s credit. It is usually a small percentage of the bond amount. Apply online for the current premium and to confirm whether instant issue is available.

Online application and important note

Bond requirements, forms, amounts, and fees are set by the requiring agency, court, or carrier and can change. This page is general information, not legal advice. Confirm the current requirement with the agency, court, client, or your attorney before applying. M. BURR KEIM AGENCY is an insurance and surety bond agency; the bond or policy is issued by the carrier named on the document.