Motor Vehicle Dealer Bond in Texas

What this bond requires in Texas

Texas motor vehicle dealers are licensed by the Texas Department of Motor Vehicles (TxDMV) under a General Distinguishing Number (GDN), which authorizes activity in categories such as Independent Motor Vehicle, Independent Motorcycle, Wholesale, Franchised, Trailer/Semitrailer, and Travel Trailer (Tex. Occ. Code Ch. 2301; Tex. Transp. Code Ch. 503). For applications submitted on or after September 1, 2021, the surety bond amount is $50,000, up from the prior $25,000 (HB 3533). Trailer/Semitrailer and Travel Trailer GDNs are statutorily exempt from the bond requirement. GDN licenses (except Salvage Dealer) renew every two years, and the bond must remain in force for the full two-year license term.

Who requires it

The motor vehicle dealer bond is required by the Texas Department of Motor Vehicles (TxDMV) under Tex. Occ. Code Ch. 2301; Tex. Transp. Code Ch. 503.

How to file in Texas

The dealer applicant obtains a surety bond on the TxDMV-prescribed Motor Vehicle Dealer Surety Bond form from an authorized surety, with TxDMV named as obligee in the amount of $50,000. The bond must be effective on the first day of a month and expire on the last day of the month two years later, matching the license term. The signed bond is submitted with the GDN application (new or renewal) through TxDMV's eLICENSING portal along with the required application materials; TxDMV will not issue or renew a GDN until a properly executed bond is on file.

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FAQ

Common questions

Is a motor vehicle dealer bond required in Texas?

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

How much is the bond in Texas?

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 Texas Department of Motor Vehicles (TxDMV).

How is the bond filed?

The dealer applicant obtains a surety bond on the TxDMV-prescribed Motor Vehicle Dealer Surety Bond form from an authorized surety, with TxDMV named as obligee in the amount of $50,000. The bond must be effective on the first day of a month and expire on the last day of the month two years later, matching the license term. The signed bond is submitted with the GDN application (new or renewal) through TxDMV's eLICENSING portal along with the required application materials; TxDMV will not issue or renew a GDN until a properly executed bond is on file.

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.