California Lost Title Bond: A Comprehensive Guide

September 20, 2021

This guide provides information for insurance agents to help their customers obtain a California Lost Title Bond

At a Glance:

• Average Cost: Minimum of $100 or 1.5% of the bond amount, whichever is greater
• Bond Amount: Equal to the fair market value of the vehicle
• Who Needs it: Vehicle title applicants in California who do not have adequate proof of ownership
• Purpose: To ensure the rightful vehicle owner does not suffer financial harm if the title applicant does not actually own the vehicle
• Who Regulates Lost Title Bonds In California: The California Department of Motor Vehicles (DMV)

Background

California statute 23.020 requires residents who never received or have lost their vehicle title to purchase a surety bond prior to obtaining their duplicate title. The California legislature enacted the bonding requirement to ensure that the rightful vehicle owner will receive compensation if the title applicant does not actually own the vehicle. The bond amount must be equal to the fair market value of the vehicle.

What is the Purpose of the California Lost Title Bond?

California requires residents to purchase a surety bond as part of the application process to obtain a duplicate title. The bond ensures that the rightful vehicle owner will not suffer a financial loss if the title applicant is seeking to obtain the title fraudulently. If the title applicant is engaging in fraud, then the rightful vehicle owner can file a claim against the bond and receive compensation up to the full amount of the bond. In short, the bond acts as a safeguard against people attempting to obtain ownership of a vehicle through unethical means.

How Can an Insurance Agent Obtain a California Lost Title Bond?

BondExchange makes obtaining a California Lost Title Bond easy. Simply log in to your account and use our keyword search to find the “title” bond in our database. Don’t have a login? Enroll now and let us help you satisfy your customers’ needs. Our friendly underwriting staff is available by phone at (800) 438-1162, email, or chat from 7:30 AM to 7:00 PM EST to assist you.

At BondExchange, our 40 years of experience, leading technology, and access to markets ensures that we have the knowledge and resources to provide your clients with fast and friendly service whether obtaining quotes or issuing bonds.

How is the Bond Amount Determined?

California statute 23.020 dictates that the limit on the lost title bond must equal the vehicle’s fair market value. To determine the vehicle’s fair market value, title applicants should have their vehicle appraised by a licensed auto dealer, auto insurance representative, or yacht and shipbroker. Alternatively, title applicants can determine the vehicle’s fair market value by utilizing information provided in a recognized industry auto valuation and pricing handbook, such as the Kelley Blue Book. If using this method, the fair market value should be calculated by adding the lowest and highest price valuations for the vehicle and dividing them by two.

Is a Credit Check Required for the California Lost Title Bond?

Surety companies will not conduct a credit check for bonds that are less than $25,000. At limits over $25,000, surety companies will review the applicant’s credit standing to determine qualification for the bond. For larger bond amounts, applicants with poor credit may be subject to a higher rate. Generally, most carriers want to have an understanding as to how the applicant came to have ownership of the vehicle.

How Much Does the California Lost Title Bond Cost?

The Califonia Lost Title Bond costs either $100 or 1.5% of the bond amount, whichever is greater (rates may vary for bonds greater than $25,000)

Who is Required to Purchase a Bond?

The California Division of Motor Vehicles will require a title applicant to purchase a surety bond if they cannot determine with certainty that the applicant actually owns the vehicle and at least one of the following conditions are met:

• The value of the vehicle is $5,000 or more ($2,000 or more for vessels)
• The vehicle is nontransferable (goldenrod)
• A release from the vehicle owner/lienholder cannot be obtained

How do California Residents Apply for a Bonded Title?

To apply for a bonded title, California residents must complete the following steps:

Step 1 – Complete the Application

California residents seeking to obtain a duplicate title must submit a title application. The application can be completed online through California’s Title Transfer Portal. Title applicants must submit a statement of facts form with their application.

Step 2 – Have the Vehicle Inspected

After completing the application, title applicants must have their vehicle inspected by a DMV representative who will fill out this form verifying the vehicle complies with all California standards

Step 3 – Purchase a Surety Bond

After completing the application and having their vehicle inspected, title applicants must purchase and maintain a surety bond in an amount equal to the vehicle’s fair market value

How Do California Bonded Title Applicants File Their Bond?

In California, bonded title applicants should mail the completed bond form, including the power of attorney, to the following address:

State of California
Department of Motor Vehicles
Registration Operations
PO Box 942869
Sacramento CA, 94269

The California Lost Title Surety Bond requires signatures from both the surety company that issues the bond and the title applicant. The surety company should include the following information on the bond form:

• • The legal name and address of entity/individual(s) buying the bond
  • Surety company’s name and address
  • Bond amount
  • Vehicle information
  • Date the bond is signed

What Are the Insurance Requirements for Bonded Title Applicants in California?

California requires all motor vehicle owners to purchase auto insurance with the following limits:

• $15,000 bodily injury per person
• $30,000 bodily injury per accident
• $5,000 property damage

Bonded title applicants must purchase and maintain a surety bond in an amount equal to the vehicle’s fair market value

How Can California Residents Avoid Claims Against Their Lost Title Bond?

To avoid claims against their bond, bonded title applicants in California must ensure that they are the rightful owners of the motor vehicle.

What Other Insurance Products Can Agents Offer Bonded Title Applicants in California?

California requires all motor vehicle owners to purchase auto insurance. Bonds are our only business at BondExchange, so we do not issue other types of insurance, but our agents often utilize brokers for this specific line of business. A list of brokers in this space can be found here.