Texas Motor Vehicle Dealer Surety Bond
Applying for or renewing a Texas dealer license? Most independent motor vehicle dealers are required to provide a $50,000 Motor Vehicle Dealer Surety Bond as part of the General Distinguishing Number, or GDN, licensing process.
Lavon Insurance makes it easy to start your Texas dealer bond application online.
What Is a Texas Motor Vehicle Dealer Bond?
A Motor Vehicle Dealer Surety Bond is a financial guarantee required for many Texas dealer-license applicants.
The dealer is the principal, the surety company issues the bond, and qualifying persons who conduct business with the dealer may have rights under the bond when the dealer commits covered acts or omissions.
The bond amount is $50,000, but this does not mean the dealer pays $50,000 to purchase the bond. The dealer pays a premium determined by the surety’s underwriting process.
The bond is part of the financial-responsibility requirements associated with applicable Texas dealer licensing.
Which Texas Dealers Need the $50,000 Bond?
Independent Motor Vehicle Dealers
Independent dealers selling qualifying used cars, trucks, motor homes and other motor vehicles generally must provide the dealer bond.
Independent Motorcycle Dealers
Independent motorcycle dealers generally must provide the required dealer surety bond as part of GDN licensing.
Wholesale Dealers
Wholesale dealers who buy and sell vehicles with other licensed dealers are also subject to the bond requirement.
What Does the Dealer Bond Protect?
The Motor Vehicle Dealer Surety Bond is intended to provide financial protection for qualifying persons who suffer damages because of covered acts or omissions by a licensed dealer.
The bond is not traditional business insurance for the dealer. A surety that pays a valid claim may seek reimbursement from the bonded dealer or other indemnitors, depending on the circumstances and bond agreement.
Texas motorists may obtain information about a dealer’s bond company when necessary to pursue a potential claim.
Important Texas Dealer Bond Requirements
TxDMV warns that dealer applications can be delayed when bond information is incomplete or incorrect.
Exact Business Name
The legal business name on the bond must match the dealer’s legal business information and applicable Secretary of State records.
Correct Physical Address
The dealership’s physical address must be listed correctly. TxDMV does not accept a mailing address in place of the required dealership location.
Correct Bond Term
The dealer bond generally runs for two years and concurrently with the dealer-license term.
Required Signatures
TxDMV requires the bond to be signed and dated by the dealership owner or principal and an authorized representative of the surety.
Power of Attorney
The bond must include the appropriate surety Power of Attorney as part of the licensing documentation.
Separate GDN Categories
TxDMV guidance states that a separate bond may be required for each applicable GDN category.
How to Get a Texas Motor Vehicle Dealer Bond
Confirm Your GDN Type
Determine the dealer-license category you are applying for and whether a $50,000 bond is required.
Apply for the Bond
Complete the online dealer surety bond application with your legal business and dealership information.
Complete Underwriting
The surety reviews the application and determines eligibility and premium.
Submit Your GDN Application
Include the required bond documentation as part of your TxDMV eLICENSING application.
The Bond Is Only One Part of Getting Your GDN
Texas requires persons engaged in the business of buying, selling or exchanging motor vehicles as a dealer to obtain the appropriate General Distinguishing Number from TxDMV.
Depending on the license category, applicants may also need to satisfy dealership-location requirements, submit ownership identification, complete dealer education and provide other supporting documents through TxDMV’s eLICENSING system.
New independent motor vehicle GDN applicants are subject to dealer-education requirements established by TxDMV.
Information You May Need for the Bond
- Exact legal business name
- DBA or assumed name, if applicable
- Dealership physical address
- Business entity type
- Owner or principal information
- Requested bond effective date
- GDN license category
- Additional ownership or underwriting information requested by the surety
Get Your Texas Dealer Bond Online
If you already know you need the $50,000 Texas Motor Vehicle Dealer Surety Bond, you can begin the application online.
Online Application
Start your $50,000 Texas dealer bond application online.
Texas Dealer Bonds
The product is specifically designed for applicable Texas motor vehicle dealer licensing requirements.
Personal Assistance
If you’re unsure whether your dealer classification requires a bond, contact us before purchasing.
Texas Motor Vehicle Dealer Bond FAQs
How much is the Texas Motor Vehicle Dealer Bond?
Does the dealer pay $50,000 for the bond?
What is a GDN?
Does every Texas dealer need a $50,000 bond?
Do independent used-car dealers need the bond?
Do wholesale motor vehicle dealers need a bond?
How long does the dealer bond last?
Does the business name on the bond have to match exactly?
Can I apply for the Texas dealer bond online?
Get Your $50,000 Texas Motor Vehicle Dealer Bond
Start your Texas dealer surety bond application online and take another step toward completing your GDN licensing requirements.
Bond approval, premium and underwriting requirements vary by applicant and surety company. Dealer licensing requirements are determined by the Texas Department of Motor Vehicles.