Motor Vehicle Dealer Bond in Iowa

What this bond requires in Iowa

Iowa requires a flat $75,000 corporate surety bond under Iowa Code § 322.4, one of the highest uniform dealer bond amounts in the country. The bond must be conditioned upon faithful compliance with all dealer statutes and indemnify any person who buys a motor vehicle from the dealer against loss caused by the dealer failure to comply with state law. Used motor vehicle dealers must also complete an 8-hour pre-licensing education course and 5 hours of continuing education for each renewal (continuing education is waived if the pre-licensing course was taken within the preceding 24 months).

Who requires it

The motor vehicle dealer bond is required by the Iowa Department of Transportation, Motor Vehicle Division - Office of Vehicle and Motor Carrier Services (Bureau of Investigation and Identity Protection) under Iowa Code Chapter 322 (§ 322.4); Iowa Admin. Code 761-425.

How to file in Iowa

Submit the completed Application for Motor Vehicle Dealer License along with the $75,000 surety bond, fees, a zoning compliance letter, franchise documentation (for new vehicle dealers), and proof of the pre-licensing education course (for used dealers) to the Iowa DOT Office of Vehicle and Motor Carrier Services. An on-site inspection by the Iowa DOT Bureau of Investigation and Identity Protection is required before the license is issued. Licenses expire December 31 of even-numbered years.

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FAQ

Common questions

Is a motor vehicle dealer bond required in Iowa?

Yes. Iowa requires motor vehicle dealer bonds issued by an admitted surety. The required amount is $75,000.

How much is the bond in Iowa?

The bond amount is $75,000. Your annual premium is a small percentage of that, based on credit and experience.

Who requires the bond?

The bond is required by the Iowa Department of Transportation, Motor Vehicle Division - Office of Vehicle and Motor Carrier Services (Bureau of Investigation and Identity Protection).

How is the bond filed?

Submit the completed Application for Motor Vehicle Dealer License along with the $75,000 surety bond, fees, a zoning compliance letter, franchise documentation (for new vehicle dealers), and proof of the pre-licensing education course (for used dealers) to the Iowa DOT Office of Vehicle and Motor Carrier Services. An on-site inspection by the Iowa DOT Bureau of Investigation and Identity Protection is required before the license is issued. Licenses expire December 31 of even-numbered years.

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.