What are surety bonds?
When we talk about surety bonds, the first thing that comes to our mind is what is exactly a surety bond. A surety bond in the simplest sense is a promise by a surety that a specific task is completed to the terms of a contract or in line with laws and regulations. In general, we can also say it is a guarantee of the performance of a specific obligation or contract.
What makes surety bonds unique?
Surety bonds are unique because they always have three parties involved. Surety bonds involve guaranteeing that one party will obey the laws and regulations required by another party, with a neutral third party acting as a guarantor.
The obligee – The obligee is the entity that is protected by the bond or other legal procedure. When it comes to automotive surety bonds the state government is the obligee. A motor vehicle dealer bond is also called an MVD bond and a car dealer bond is also known as a DMV bond.
The principal – The person or the company purchasing the bond and promising to adhere to the terms of the bond.
The surety – The surety company is issuing and backing the bond for the principal and guaranteeing indemnification to the obligee if a claim is made.
If a third party believes that the vehicle has failed to act legally and ethically, that party can file a claim with the surety that issued the company’s or person’s dealer bond.
Who can typically file a claim under a dealer bond?
- The consumers who buy vehicles from the dealers.
- The sellers sell their vehicles to the dealer.
- Lenders who financed the consumer through the dealer.
- Other creditors and floor planners who secure inventory financing to the principal.
- The state regulators are involved in issuing the dealership license as the obligee.
How do automotive surety bonds protect your vehicle?
An automotive surety bond or title bond is mandatory by the State of Texas when the owner of the vehicle does not have enough proof of vehicle ownership. A surety bond helps you if you are unable to find the original title for your vehicle or register your vehicle because you do not have sufficient documentation.
Surety bonds are an important requirement especially for businesses that deal with automobile sales and services. These bonds help to protect the customer and driver while keeping auto industry businesses accountable.
If you are working with a strong surety bond agency like Leo’s auto insurance in Texas, it will make sure you are immediately made aware of any kind of claims which are made against your bond.
Looking for the best automotive surety bond for you?
Contact Leo’s auto insurance today for the best surety bonds in Texas at the most affordable rates. They provide you with premium services in every aspect and choosing their auto insurance will be the right choice for you when it comes to automotive surety bonds.
Author’s Bio
Shrey Jain is the Co-Founder of Writofy & a Chartered Accountant who works with a team of creative content writers. He holds a forte in creating informative content on niches like crypto, business, fintech, digital marketing, and several others. In addition, his willingness to learn and share his knowledge can immensely help readers get valuable insights on varied topics.
