Idaho Auto Dealer Bond: A Comprehensive Guide

October 16th, 2020

This guide provides information for insurance agents to help new and pre-owned car dealers on Idaho Auto Dealer bonds

At a Glance:

• Average Cost: 0.5% to 6% of the bond amount per year, based on the business owner’s credit
• Bond Amount: 
  • $40,000 for wholesale only dealers
  • $20,000 for retail dealers
  • $10,000 for retail dealers who deal only in motorcycles, ATVs, UTVs, or snowmobiles
• Who Needs It: All individuals and businesses that sell or deal in 5 or more motor vehicles in a calendar year
• Purpose: To ensure the public will receive compensation for any damages should the auto dealer fail to comply with dealer licensing law
• Who Regulates Dealers in Idaho: The Idaho Transportation Department, Division of Motor Vehicles (DMV)

Background

Idaho Statutes 49-1606 mandates auto dealers operating in the state to obtain a motor vehicle dealer license with the DMV. The Idaho legislature enacted the license and regulations to ensure that dealers engage in ethical business practices and remit required taxes and fees. In order to provide financial security for the enforcement of the license law, dealers must purchase and maintain a motor vehicle dealer surety bond to be eligible for licensure.

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What is the Purpose of the Idaho Auto Dealer Bond?

Idaho requires dealers to purchase the Motor Vehicle Dealer Bond as part of the application process for the Motor Vehicle Dealer License. The bond ensures that the public will receive compensation for financial harm if the auto dealer fails to comply with the licensing regulations and that the dealer will pay all required taxes and fees to the State of Idaho. In short, the bond is a type of insurance that protects the public if the dealer breaks licensing laws.

How Can an Insurance Agent Obtain an Idaho Auto Dealer Bond?

BondExchange makes obtaining an Idaho Auto Dealer Bond easy. Simply login to your account and use our keyword search to find the “auto dealer” 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 (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 ensure that we have the knowledge and resources to provide your clients with fast and friendly service whether obtaining quotes or issuing bonds.

How Much Does the Idaho Auto Dealer Bond Cost?

The Idaho vehicle or vessel dealer bond can cost anywhere between 0.5% to 6% of the bond amount for a 1-year term. Insurance companies determine the rate based on a number of factors including your customer’s credit score and experience. We also offer easy interest-free financing for premiums over $500. The chart below offers a quick reference for the approximate bond cost on the $20,000 bond requirement.

$20,000 Idaho Auto Dealer Bond Cost

*The credit score ranges do not include other factors that may result in a change to the annual premium offered to your customers, including but not limited to, years of experience and underlying credit factors contained within the business owner’s credit report.

How Does Idaho Define “Motor Vehicle Dealer”?

To paraphrase Idaho Statutes 49-1606, a motor vehicle dealer is anyone who sells or deals in 5 or more motor vehicles in a calendar year. Exemptions to this definition include:

• Insurance, financial, and public utility companies disposing of motor vehicles as part of their regular course of business
• Manufacturers who sell specialty vehicles (fire trucks, ambulances, street sweepers, etc)

How Do Dealers Apply for a Motor Vehicle Dealer License in Idaho?

The process for applying for a motor vehicle dealer license in Idaho is pretty complex. Below are the general guidelines, but dealers should refer to the Idaho Dealer Handbook for details on the process.

***Dealers should call Dealer Services at (208) 334-8681 prior to completing their application to ensure their business name is unique.***

License Period – The Idaho Dealer License expires one year from the date of issuance and must be renewed before the expiration date

Step 1 – Determine the License Type

Idaho requires dealers to obtain specific licenses corresponding to the nature in which the dealer’s business operates. Keep in mind that dealers will need to acquire a license for each type of business they wish to operate. Below are the different types of Idaho Dealer Licenses.

• • Retail – Sells motor vehicles to the general public
  • Wholesale – Sells motor vehicles to licensed dealers

Step 2 – Establish a Location

Dealers are required to establish a permanent place of business that meets the following minimum requirements:

• • Declare the hours the dealership will be open
  • Have a permanently affixed sign that is clearly visible from the nearest public road. The sign should be at least 24 square feet with 4-inch lettering that contains the dealership’s name, address, and dealer number. Wholesale dealers may paint their sign on their office window.
  • Contain an office
  • Telephone number registered in the business name
  • Have a display lot large enough to display at least 5 motor vehicles (not required for wholesale only dealers)

Dealers must obtain written approval from their local zoning authority certifying their business location is in compliance with all applicable zoning regulations.

Step 3 – Acquire Insurance

Dealers must obtain liability insurance and submit a Certificate of Insurance with their application. The minimum insurance limits required are:

• • $25,000 per person
  • $50,000 per accident
  • $15,000 for property damage

Step 4 – Purchase a Surety Bond

Dealers must purchase and maintain either a vehicle or vessel dealer bond in the following amounts based on license class:

• • $40,000 for wholesale only dealers
  • $20,000 for retail dealers
  • $10,000 for retail dealers who deal only in motorcycles, ATVs, UTVs, or snowmobiles

Step 5 – Complete Dealer Education

Dealers selling used motor vehicles only and wholesalers must complete an 8-hour pre-licensing class and pass a final exam before submitting their application. Dealers can call the Independent Automobile Dealers Association at (208) 463-7709 to register for a pre-licensing course.

Step 6 – Complete the Application

All new dealer regulatory license applications and dealer regulatory license renewal applications should be mailed to:

Dealer Services
Idaho Transportation Department
PO Box 34
Boise ID 83731-0034

Dealers can access the application packet here.

• • 6.a Franchise Agreement – Dealers who sell new motor vehicles must have a franchise agreement with a manufacturer authorizing them to sell each make and model of new motor vehicle
  • 6.b Business Type – Dealers must submit proof of corporate, LLC, or LLP status with their application. Dealers can register their business with the Idaho Secretary of State.
  • 6.c Sales Tax – Dealers must submit a copy of their Sales Tax Number Certificate. Dealers can obtain this certificate with the Idaho State Tax Commission.
  • 6.d EIN Number – Dealers must have an Employer Identification Number to be eligible for licensure. Dealers can obtain an EIN with the IRS.
    6.e Personal History and Salesperson – All individuals listed on the dealer application must submit a personal history/salesperson form with their application. All individuals directly selling motor vehicles must be licensed salespeople.
  • 6.f Phone Number – Dealers must submit verification that a phone number registered in the business name is listed in their local directory

Step 7 – Pay Fees

The following fees are associated with obtaining the Idaho Dealer License:

• • $190 initial application fee
  • $300 initial application ICAR fee (retail dealers only)
  • $23 fee per dealer plate
  • $44 supplemental lot fee
  • $44 change of location fee

Step 8 – Pass Inspection

After the dealer has submitted their application and paid all required fees, a Motor Vehicle Investigator will contact the dealer to schedule an inspection of the dealer’s business location.

How Do Idaho Auto Dealers Renew Their License?

The Idaho Dealer License expires one year from the date of issuance and must be renewed before the expiration date. Used or wholesale only dealers must complete 4 hours of continuing education a year to have their license renewed. Dealers should mail their completed renewal application, along with the $175 renewal fee, to the following address:

Dealer Services
Idaho Transportation Department
PO Box 34
Boise ID 83731-0034

What Are the Insurance Requirements for the Idaho Auto Dealer License?

The State of Idaho requires dealers to obtain liability insurance with minimum limits of 25/50/15. Dealers must also file either a $40,000, $20,000 or $10,000 vehicle or vessel dealer surety bond.

How Do Idaho Auto Dealers File Their Bond?

Dealers should mail the completed bond form, including the power of attorney, to the following address:

Dealer Services
Idaho Transportation Department
PO Box 34
Boise ID 83731-0034

The vehicle or vessel dealer bond requires signatures from both the surety company that issues the bond and the auto dealer. The bond form will require the following items:

• Legal name, address, and phone number of individual(s)/entity buying the bond
• Name, address, and phone number of the surety company
• Bond amount
• Date the bond is sealed
• Signature of an authorized notary

How Can Idaho Auto Dealers Avoid Bond Claims?

To avoid claims on the Motor Vehicle Dealer Bond, dealers must follow all dealer regulations in the state, including some of the most important issues below that, tend to cause claims:

• Disclose all required information when transferring ownership of a vehicle
• Do not engage, or allow representatives of the business to engage, in any acts of fraud
• Pay sellers of vehicles promptly and in full
• Do not engage in any illegal selling practices

What Other Insurance Products Can Agents Offer Dealers in Idaho?

Idaho requires motor vehicle dealers to obtain comprehensive liability insurance on vehicles with dealer plates. Most reputable dealers that provide towing or service station services should also obtain garage keeper’s liability. Bonds are our only business at BondExchange, so we do not issue any form of liability insurance, but our agents often utilize brokers for this specific line of business. A list of brokers in this space can be found here.

How Can Insurance Agents Prospect for Idaho Auto Dealer Customers?

Idaho conveniently provides a list of active motor vehicle dealers in the state. The list can be accessed here. Contact BondExchange for additional marketing resources. Agents can also leverage our print-mail relationships for discounted mailing services.

What Other States Require Auto Dealer Bonds?

All 50 states and the District of Columbia require auto dealers to obtain an Auto Dealer Bond as a prerequisite for licensure. Insurance agents should utilize our Main MVD Page for a detailed analysis of the Auto Dealer Bond requirements nationwide.