Motor Vehicle Dealer Bond in Alabama

What this bond requires in Alabama

Alabama does require a state-level dealer surety bond: ALDOR mandates a continuous $50,000 bond payable to the State of Alabama for all motor vehicle dealer licensees, with the bond conditioned on compliance with sale/exchange contracts and licensing law (Ala. Code § 40-12-398). The dealer bond also covers the mandatory designated agent role, so a separate non-dealer DA bond is not needed. Bonds must be executed on ALDOR-prescribed Form MVT 4-3 and submitted through MyDMV. Late renewals incur a 15% penalty plus interest.

Who requires it

The motor vehicle dealer bond is required by the Alabama Department of Revenue, Motor Vehicle Division under Ala. Code §§ 40-12-390 through 40-12-400 (esp. § 40-12-398).

How to file in Alabama

Apply electronically through the Alabama Partner Registration in MyDMV. After submission, ALDOR issues a transmittal sheet listing required supporting documents, including the executed MVT 4-3 continuous $50,000 surety bond (on the ALDOR-prescribed form, signed by surety and principal), proof of $25k/$50k/$25k blanket dealer liability insurance, and the $125 master dealer license fee ($5 per additional location). Documents are uploaded through MyDMV; processing typically takes 3-5 business days. Renewals are filed annually through mvlicense.mvtrip.alabama.gov by October 31 for the license year that begins October 1.

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FAQ

Common questions

Is a motor vehicle dealer bond required in Alabama?

Yes. Alabama requires motor vehicle dealer bonds issued by an admitted surety. The required amount is $50,000.

How much is the bond in Alabama?

The bond amount is $50,000. Your annual premium is a small percentage of that, based on credit and experience.

Who requires the bond?

The bond is required by the Alabama Department of Revenue, Motor Vehicle Division.

How is the bond filed?

Apply electronically through the Alabama Partner Registration in MyDMV. After submission, ALDOR issues a transmittal sheet listing required supporting documents, including the executed MVT 4-3 continuous $50,000 surety bond (on the ALDOR-prescribed form, signed by surety and principal), proof of $25k/$50k/$25k blanket dealer liability insurance, and the $125 master dealer license fee ($5 per additional location). Documents are uploaded through MyDMV; processing typically takes 3-5 business days. Renewals are filed annually through mvlicense.mvtrip.alabama.gov by October 31 for the license year that begins October 1.

What does the bond cover?

Surety bonds protect the obligee, not the principal. If you fail to meet the obligation the bond guarantees, the surety pays the claim and recovers from you.

Is a surety bond the same as insurance?

No. Insurance protects you. A surety bond protects whoever required the bond. You repay the surety for any claim they pay.