Not everyone in the auto industry are experts in all aspects of it especially when it comes to insurances so it’s maybe time for you to learn some of the most important aspects of auto industry’s insurances especially about the surety bonds that are mostly required for dealers who sell pre-owned or used cars to fully operate with a license.
If you are skeptical about used car surety bonds, well it is very important for dealers like you to have an insurance bond to ensure that you are well managed legally to be qualified in this kind of enterprise.
Most used car dealers leave it to their legal counsel and insurance agents to take care in processing the requirements during their application without taking time to understand the terms and conditions and the important details about this insurance bond that is why you should learn these five things about used car surety bonds.
The government agency that handles the licensing of auto dealers requires them to file surety bonds including dealers of used cars in Montclair.
When the time comes that they will figure themselves into a problem or an issue that requires them to use their surety bonds for sure they will be clueless that is why it is important to read through this short article and learn something from this topic today.
SURETY BONDS DO NOT COMPLETELY INSURE YOUR BUSINESS
A lot of business owners including used car dealers make such assumption that purchasing or availing of a surety bond already insures them of financial guarantees whichever claims they want to be granted but to tell you honestly, this kind of expectation must be stopped because insurance agents are required to conduct such investigation to justify the claims of their clients. Financial guarantees in surety bonds do not assure any people from protecting them from the costs that they assume to be associated with legal claims.
Yes, a surety bond is a type of insurance policy but it is only applicable when the insurance agent concludes that there are discrepancies, fraudulent acts and other criminal act done by the client or consumer of a car dealer. Surety bonds work like a line of credit that is used as a fee to issues that are closely related to work performances in the car dealership.
LEGALLY bound CONTRACT
Just like any other legal contract in an insurance company, there must be a mutual understanding and agreement between the insurance company and the car dealer with regards to the terms and conditions of the surety bond that the latter is availing. Otherwise, the contract will be considered null and void if there the car dealer is involved in the issues they are facing with the claims they wanted to be granted.
FAILURE TO MAINTAIN A SURETY BOND IS A VIOLATION
If you have a license to operate a car dealership, you are also obliged to maintain a good withstanding surety bond account in an insurance company. You are required to renew your surety bond regularly to avoid any lapses that are covered by the surety bond that you are availing.