Motor Vehicle Dealer Bond (Class 2 Used Car Dealer) in Massachusetts

Yes. Massachusetts requires motor vehicle dealer bond (class 2 used car dealer)s issued by an admitted surety. The required amount is $25,000.

The bond amount is $25,000. Your annual premium is a small percentage of that, based on credit and experience.

The bond is required by the Municipal licensing authority (city/town board of selectmen, city council, or licensing board) of the municipality where the dealer is located; dealer plates/registrations are issued by the Massachusetts Registry of Motor Vehicles (RMV).

Class 2 used car dealer applicants obtain a surety bond in the amount of $25,000 from a surety company authorized by the Massachusetts Division of Insurance to transact business in the Commonwealth, then file the original bond with the municipal licensing authority (city/town board) along with the local dealer license application. The municipal authority will not issue or renew a Class 2 license without verified bonding in effect. Once licensed, the dealer applies to the Massachusetts RMV for dealer plates and registration. Licenses expire January 1 each year and must be renewed annually.

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.

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