October 20th, 2020

Mississippi Used Auto Dealer Bond: A Comprehensive Guide

michigan auto dealer bond

This guide provides information for insurance agents to help  pre-owned car dealership owners on Mississippi Auto Dealer bonds

At a Glance:

  • Bond Cost: $150 per year
  • Bond Amount: $15,000
  • Who Needs It: All individuals or business entities who sell or deal in used motor vehicles either directly or indirectly
  • Purpose: To ensure the public will receive compensation for any damages should the auto dealer fail to comply with dealer licensing law
  • Who Regulates Dealers in Mississippi: The Mississippi Department of Revenue (DOR)

Background

35.VII.4.01 of the Mississippi Administrative Code mandates auto dealers operating in the state to obtain a used motor vehicle dealer license with the DOR. The Mississippi legislature enacted the license and regulations to ensure that dealers engage in ethical business practices and remit required taxes and fees. In order to provide financial security for the enforcement of the license law, dealers must purchase and maintain a $15,000 bond of designated agent for motor vehicle dealers to be eligible for licensure.

What is the Purpose of the Mississippi Auto Dealer Bond?

Mississippi requires dealers to purchase the Used Motor Vehicle Dealer Bond as part of the application process for the Used Motor Vehicle Dealer License. The bond ensures that the public will receive compensation for financial harm if the auto dealer fails to comply with the licensing regulations and that the dealer will pay all required taxes and fees to the State of Mississippi. In short, the bond is a type of insurance that protects the public if the dealer breaks licensing laws.

mississippi auto dealer bond

Mississippi Bond of Designated Agent for Motor Vehicle Dealers (Form 78-905-10)

How Can an Insurance Agent Obtain a Mississippi Auto Dealer Bond?

BondExchange makes obtaining a Mississippi Auto Dealer Bond easy. Simply login to your account and use our keyword search to find the “auto dealer” bond in our database. Don’t have a login? Enroll now and let us help you satisfy your customers’ needs. Our friendly underwriting staff is available by phone (800) 438-1162, email or chat from 7:30 AM to 7:00 PM EST to assist you.

At BondExchange, our 40 years of experience, leading technology, and access to markets ensures that we have the knowledge and resources to provide your clients with fast and friendly service whether obtaining quotes or issuing bonds.

How Much Does the Mississippi Auto Dealer Bond Cost?

The $15,000 Mississippi Motor Vehicle Dealer surety bond costs just $150 per year. Generally, insurance companies determine the rate based on a number of factors including your customer’s credit score and experience; however BondExchange has an exclusive program which allows for these bonds to be quoted and issued without a credit check!

How Does Mississippi Define “Used Motor Vehicle Dealer”?

To paraphrase Mississippi Code 27-16-303, a used motor vehicle dealer is any business entity that sells or exchanges 24 or more used motor vehicles per year. Exemptions to this definition include:

  • Directors, stockholders or inactive partners of the dealer’s business
  • Any person acting under a court order
  • Public officials performing official duties
  • Any person disposing of a motor vehicle obtained for personal use
  • Financial institutions, banks, and insurance companies who sell motor vehicles as part of their normal business activities

How Do Auto Dealers Apply for a License in Mississippi?

Dealers in Mississippi must navigate several steps to secure their motor vehicle dealer license. Below are the general guidelines, but dealers should refer to the Dealer License Packet for details on the process.

License Period – The Mississippi Dealer License Expires on October 31st of each year regardless of the date of issuance and must be renewed before the expiration date.

Step 1 – Establish a Location

Before dealers can obtain their dealer license they must first buy or lease a permanent business location. The location must meet the following requirements:

    • Is separate from any other business
    • Has sufficient space to store all required records and documents
    • Contains a display lot to showcase motor vehicles for sale

Step 2 – Purchase a Surety Bond

Dealers must purchase and maintain a $15,000 designated agent surety bond for motor vehicle dealers.

Step 3 – Complete Dealer Education

Dealers must attend an 8 hour dealer education pre-licensing seminar hosted by the Mississippi Independent Auto Dealers Association. The seminar costs $395 per attendee, and dealers can register for the seminar here. Dealers must submit their Certificate of Completion with their application.

Step 4 – Obtain Insurance

Dealers must obtain blanket coverage liability insurance (limits not specified) on all vehicles with dealer plates. Dealers should submit proof of insurance with their application.

Step 5 – Complete the Application

All new dealer regulatory license applications and dealer regulatory license renewal applications should be mailed to:

Mississippi Department of Revenue
Motor Vehicle Services Bureau
P. O. Box 1140
Jackson, MS 39215

Dealers can access the application here. The following information should be included with the application:

    • 5.a Sales Tax – All dealers must have a Mississippi Sales Tax Number and list this number on their application. Dealers can obtain a sales tax number here.
    • 5.b Affidavit – Dealers must complete the Dealer Affidavit contained in the application. An authorized notary must sign the affidavit.
    • 5.c Dealer Plates – Dealers are allotted the same number of dealer tags as they have full time employees. Mississippi considers any individual working more than 35 hours a week to be full time. If a dealer is requesting more tags than employees, they must justify their request to the DOR.

Step 6 – Pay Fees

Used dealer applicants must pay a $100 application fee when submitting their application. Used dealers must also pay a $43.75 fee for each dealer tag requested.

How Do Mississippi Auto Dealers Renew Their License?

The Mississippi Dealer License Expires on October 31st of each year regardless of the date of issuance and must be renewed before the expiration date. Dealers should mail their renewal application, along with all forms and fees to the following address:

Mississippi Department of Revenue
Motor Vehicle Services Bureau
P. O. Box 1140
Jackson, MS 39215

What Are the Insurance Requirements for the Mississippi Auto Dealer License?

The State of Mississippi requires Used Motor Vehicle Dealers to obtain blanket coverage liability insurance (Limits not specified) on all vehicles with dealer plates. Dealers must purchase and maintain a $15,000 motor vehicle dealer surety bond.

How Do Mississippi Auto Dealers File Their Bond?

Dealers should mail the completed bond form, including the power of attorney, to the following address:

Mississippi Department of Revenue
Motor Vehicle Services Bureau
P. O. Box 1140
Jackson, MS 39215

The $15,000 surety bond requires signatures from both the surety company that issues the bond and the auto dealer. The bond form will require the following items:

  • Date the bond goes into effect
  • Legal name and address of individual(s)/business entity purchasing the bond
  • Address and phone number of the surety company
  • Date the bond is sealed

How Can Mississippi Auto Dealers Avoid Bond Claims?

To avoid claims on the Motor Vehicle Dealer Bond, dealers must follow all dealer regulations in the state, including some of the most important issues below that tend to cause claims:

  • Do not engage, or allow representatives of the business to engage, in any acts of fraud
  • Pay sellers of vehicles promptly and in full
  • Transfer all vehicle titles when sold
  • Adhere to all dealer plate regulations
  • Do not engage in any illegal selling practices

What Other Insurance Products Can Agents Offer Dealers in Mississippi?

Mississippi requires dealers to obtain blanket coverage liability insurance on all vehicles with dealer plates. Most reputable dealers that provide towing or service station services should also obtain garage keepers liability. Bonds are our only business at BondExchange, so we do not issue any form of liability insurance, but our agents often utilize brokers for this specific line of business. A list of brokers in this space can be found here.

How Can Insurance Agents Prospect for Mississippi Auto Dealer Customers?

Mississippi conveniently provides a public database to search for active motor vehicle dealers in the state. The database can be accessed on the DOR site here for used dealers, and on the MVC site here for new dealers and manufacturers. Contact BondExchange for help developing a marketing piece. Agents can also leverage our print-mail relationships for discounted mailing services.

What Other States Require Auto Dealer Bonds?

All 50 states and the District of Columbia require auto dealers to obtain an Auto Dealer Bond as a prerequisite for licensure. Insurance agents should utilize our Main MVD Page for a detailed analysis of the Auto Dealer Bond requirements nationwide.

2020-11-23T13:26:19+00:00

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