Texas Motor Vehicle Dealer Surety Bond
Applying for or renewing a Texas dealer license? In most cases, TxDMV requires a $50,000 Motor Vehicle Dealer Surety Bond with every new and renewal General Distinguishing Number (GDN) application. Fortunately, Lavon Insurance makes it easy to start your Texas dealer bond application online.
- $50,000 bond amount required by TxDMV
- Two-year term that runs with your GDN license
- Required for new and renewal GDN applications
- Independent, wholesale and motorcycle dealers
- Apply online, with personal help if you need it
What Is a Texas Motor Vehicle Dealer Bond?
A Motor Vehicle Dealer Surety Bond is a financial guarantee that protects customers who do business with a licensed Texas dealer. In other words, if a dealer commits a covered act and a customer wins a judgment, the bond provides a source of payment.
Principal
The licensed dealership that must follow Texas dealer laws.
Obligee
The State of Texas, which requires the bond through TxDMV.
Surety
The bonding company that issues the bond and pays valid claims.
The $50,000 is the bond amount, not the price. Instead, you pay a premium set by the surety’s underwriting. Keep in mind, however, that the bond isn’t insurance for the dealer. If the surety pays a valid claim, the dealer must repay it. Moreover, TxDMV notes the dealer is responsible for any claims beyond $50,000.
Which Texas Dealers Need the $50,000 Bond?
Generally, any dealer applying for or renewing a motor vehicle or motorcycle GDN needs the bond. For example:
Independent Motor Vehicle Dealers
Independent dealers selling used cars, trucks, motor homes and other motor vehicles.
Independent Motorcycle Dealers
Likewise, independent motorcycle dealers must file the bond with their GDN application.
Wholesale Dealers
Similarly, wholesale dealers who buy and sell with other licensed dealers are also subject to the requirement.
On the other hand, TxDMV’s Motor Vehicle Dealer Manual exempts franchise dealers, travel trailer GDN dealers and utility trailer/semitrailer GDN dealers. Therefore, confirm your GDN category before you buy a bond.
Important Texas Dealer Bond Requirements
TxDMV can delay your GDN application when bond details are incomplete or incorrect. As a result, it pays to get these right the first time.
Exact Legal Business Name
The bond and Power of Attorney must show your full legal business name exactly as it appears in your licensing records.
Complete Physical Address
Likewise, list the dealership’s physical address, including any suite number. A mailing address isn’t a substitute.
Two-Year Term
The bond must run for two years, concurrently with your license, and expire on the last day of the month.
Required Signatures
In addition, both the dealer and the bond company representative must sign and date the bond before you submit it.
Power of Attorney
Furthermore, include the surety’s Power of Attorney with the bond as part of your licensing documents.
No Lapse in Coverage
Finally, coverage can’t lapse during the two-year license term, so renew on time.
How to Get a Texas Motor Vehicle Dealer Bond
Confirm Your GDN Type
First, confirm your dealer license category and whether it requires the $50,000 bond.
Apply for the Bond
Next, complete the online application with your exact legal business name and dealership address.
Complete Underwriting
Then the surety reviews your application and sets your eligibility and premium.
Submit to TxDMV
Finally, upload the signed bond and Power of Attorney with your TxDMV eLICENSING application.
The Bond Is Only One Part of Getting Your GDN
Texas requires anyone in the business of buying, selling or exchanging motor vehicles to hold the right GDN from TxDMV. Beyond the bond, applicants may also need to meet dealership location requirements, submit ownership identification and provide other documents through eLICENSING.
In addition, new motor vehicle GDN applicants must complete a TxDMV-approved licensing education course. However, dealers who had held a motor vehicle GDN for at least 10 years as of September 1, 2019 are exempt.
- Exact legal business name and DBA, if any
- Dealership physical address, including suite
- Business entity type
- Owner or principal information
- Requested bond effective date
- GDN license category
- Other information requested by the surety
GDN Dealer Bond vs. Dealer Registration Bond
Texas dealers sometimes confuse these two bonds. In fact, they serve completely different purposes.
| Feature | Motor Vehicle Dealer Bond | Dealer Registration Bond |
|---|---|---|
| Purpose | Texas GDN dealer license | County dealer-deputy title and registration work |
| Required by | TxDMV | County tax assessor-collector |
| Amount | $50,000 | Set by the county ($100,000 to $5,000,000 for dealer deputies) |
| Who needs it | Most GDN license holders | Only dealers deputized by their county |
Has your county asked for a deputy bond? Learn about the Dealer Registration Bond.
Texas Motor Vehicle Dealer Bond FAQs
How much is the Texas Motor Vehicle Dealer Bond?
The required bond amount is $50,000 for all new and renewal GDN applications, except for exempt dealer categories.
Does the dealer pay $50,000 for the bond?
No. $50,000 is the bond amount. Instead, the dealer pays a premium set by the surety’s underwriting.
What is a GDN?
GDN stands for General Distinguishing Number. It’s the basic Texas dealer license for the type of vehicle sales the license authorizes.
Does every Texas dealer need a $50,000 bond?
No. TxDMV exempts franchise dealers, travel trailer GDN dealers and utility trailer/semitrailer GDN dealers. However, independent motor vehicle, motorcycle and wholesale dealers generally need it.
How long does the dealer bond last?
The bond is issued for two years, runs concurrently with your GDN license and expires on the last day of the month. As a result, you renew it along with your license.
Does the business name on the bond have to match exactly?
Yes. The bond and Power of Attorney must show your legal business name and complete physical address. Otherwise, TxDMV may delay your application.
What happens if a claim is made on my dealer bond?
A claimant generally must obtain a judgment for an act covered by the bond during the license term. If the surety pays, the dealer must repay it. Furthermore, the dealer is responsible for any claims beyond $50,000.
How can a customer find a dealer’s bond information?
Dealers must post a bond notice telling consumers that the dealer’s surety bond information can be obtained by submitting a request to TxDMV.
Do new dealers need licensing education?
Yes. New motor vehicle GDN applicants must complete a TxDMV-approved licensing education course. However, dealers who had held a motor vehicle GDN for at least 10 years as of September 1, 2019 are exempt.
Can I apply for the Texas dealer bond online?
Yes. You can start your $50,000 Texas Motor Vehicle Dealer Bond application online. Approval and premium, however, remain subject to surety underwriting.
Other Texas Motor Vehicle Bonds
Dealer Registration Bond
For dealers deputized by their county to process title and registration work.
Dealer Registration Bond →Texas Title Bonds
Bonded titles for vehicles without proper ownership documents.
Texas Title Bonds →Commercial Insurance
Garage liability, property and other coverage for your dealership.
Commercial Insurance →Get Your $50,000 Texas Motor Vehicle Dealer Bond
Start your dealer bond application online today, and take the next step toward completing your GDN license.
Bond approval, premium and underwriting requirements vary by applicant and surety company. Dealer licensing requirements are set by the Texas Department of Motor Vehicles; confirm current requirements with TxDMV.