The Top Three Surety Bonds in Ohio

Ohio’s top three surety bonds are Contractor License Bonds, Motor Vehicle Dealer Bonds, and Lottery Sales Bonds. This week we’ll cover each of the three bonds, discussing who is required to obtain them, the bond amount, and more.

Ohio Contractor License Bonds

Most states have a contractor license bond requirement, but not Ohio. In Ohio, each county, city, and municipality have their own bond requirement. Instead of having one bond required by the state, a contractor in Ohio may have dozens, for each city work is performed in. Ohio contractor license bonds vary in bond amount and term, but most are one- or two-year bonds with a bond amount between $10,000 and $25,000.

Ohio Motor Vehicle Dealer Bonds

Ohio motor vehicle dealer bonds are required for all motor vehicle dealerships. A used motor vehicle dealer, as required in section 4501:1-3-11 of the Ohio Administrative Code (OAC), shall post with the Attorney General’s Office in favor of this state, a surety bond in the amount of twenty-five thousand dollars ($25,000). Auto dealers entering into the business or existing businesses must file and keep a surety bond with the Ohio Bureau of Motor Vehicles before they can receive their auto dealer license. The surety bond is used solely for the purpose of replenishing funds that have been distributed from the Title Defect Rescission (TDR) fund to compensate retail purchasers of the said dealership. No license will be issued if a surety bond has not been secured meeting the requirements below. Proof that a surety bond has been secured must be submitted with the application.

The bond form can be found on the Ohio Bureau of Motor Vehicles website.

Ohio Lottery Sales Bonds

The Ohio Lottery Commission requires that most lottery sales retailers furnish a $15,000 surety bond to guarantee compliance with the rules and regulations established by the Commission. The surety bond is for those who wish to become a licensed lottery retailer and is conditioned upon the retailer’s compliance with all laws, rules, policies, and regulations governing the license. Businesses that may be a retailer are gas stations, grocery stores, or any place where lottery tickets are sold in Ohio.

Most retailers are required to carry a $15,000 bond but may be required to carry a higher bond based on lottery sales. A surety bond typically costs $10 to $15 per thousand dollars of coverage. The lottery issues tickets on consignment. The bond protects the lottery against any monies due from the retail locations. Additional information regarding the lottery retailer application process can be found on the Ohio Lottery website.

California Motor Vehicle Dealer Bonds

Did you know every car dealer in California is required to have a California Motor Vehicle Dealers Bond for $50,000 in order to maintain or obtain a business license? The Surety Division team at AAU: Allied American Underwriters can assist with a marketing strategy to target these bonds, including how to get a leads list. More information about Vehicle Dealerships licensing requirements can be found on the California Department of Motor Vehicles website.

California Motor Vehicle Dealer Bond Details

The bond protects the Obligee (State of California DMV) by transferring the cost of ensuring the public is compensated for damages resulting from a licensed business breaking licensing laws to a surety bond company. This bond must be issued by an insurance carrier admitted by the Department of Insurance. The Motor Vehicle Dealer Bond should not be confused with the Wholesale Dealer bond, required for wholesale motor vehicle dealers in the amount of $10,000.

The three parties of a California Motor Vehicle Dealers Bond:

  • Obligee: State of California Department of Motor Vehicles – Licensing Operations Division, Occupational Licensing Branch, P.O. Box 932342, MS:L224, Sacramento, CA 94232-3420
  • Principal: The Motor Vehicle Dealer
  • Surety: The Surety Company

Targeting Dealers

  • Use the How To Find CA Dealerships – Bond sheet to obtain a list of dealer contacts.
  • In order to obtain their license, all new dealers must attend a class. Contacting the business who offers the educational course may lead to a steady stream of bond applicants.