Nebraska Auto Dealer Bond: A Comprehensive Guide

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

At a Glance:

• Lowest Cost: $225 per year or $23 per month, based on the business owner’s credit
• Bond Amount:
  • $100,000 for auction dealers
  • $50,000 for a motor vehicle, trailer, wholesale or motorcycle dealers
• Who Needs It: All individuals or business entities who sell or deal in 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 Nebraska: The Nebraska Motor Vehicle Industry Licensing Board (MVILB)

Background

Nebraska Revised Statute 60-1406 mandates auto dealers operating in the state to obtain a motor vehicle dealer license with the MVILB. The Nebraska 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 either a $50,000 or $100,000 motor vehicle dealer surety bond to be eligible for licensure.

What is the Purpose of the Nebraska Auto Dealer Bond?

Nebraska requires dealers to purchase the Motor Vehicle Dealer Bond as part of the application process for the 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 Nebraska. In short, the bond is a type of insurance that protects the public if the dealer breaks licensing laws.

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

BondExchange makes obtaining a Nebraska 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? Gain access 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 ensure that we have the knowledge and resources to provide your clients with fast and friendly service whether obtaining quotes or issuing bonds.

Not an agent? Then let us pair you with one!

Click the above image to find a BX Agent near you

How Much Does the Nebraska Auto Dealer Bond Cost?

The $50,000 Nebraska Motor Vehicle Dealer surety bond can cost anywhere between $225 to $5,000 per year or $23 to $500 per month. Insurance companies determine the rate based on a number of factors including your customer’s credit score and experience. We also offer easy interest-free financing for premiums over $500. The chart below offers a quick reference for the approximate bond cost on the $50,000 bond requirement.

$50,000 Nebraska Auto Dealer Bond Cost

*The credit score ranges do not include other factors that may result in a change to the annual premium offered to your customers, including but not limited to, years of experience and underlying credit factors contained within the business owner’s credit report.

How Does Nebraska Define “Motor Vehicle Dealer”?

Nebraska Revised Statute 60-1406 considers any person or business entity who buys, sells, or deals in motor vehicles either directly or indirectly to be a motor vehicle dealer.

BondExchange now offers monthly pay-as-you-go subscriptions for surety bonds. Your customers are able to purchase their bonds on a monthly basis and cancel them anytime. Learn more here.

How Do Auto Dealers Apply for a License in Nebraska?

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

License Period – The Nebraska Dealer License expires on December 31st of each year regardless of the date of issuance and must be renewed before the expiration date.

Step 1 – Determine the License Type

Nebraska requires dealers to obtain specific licenses corresponding to the nature in which the dealer’s business operates. Keep in mind that dealers will need to acquire a license for each type of business they wish to operate. Below are the different types of the Nebraska Dealer License.

• • Dealer
    • Combination Motor Vehicle/Trailer Dealer – Authorized to sell new or used motor vehicles, trailers, and motorcycles
    • Trailer Dealer – Sells new or used trailers only
    • Motorcycle Dealer – Sells new or used motorcycles only
  • Auction – Sells motor vehicles at an auction
  • Wreckage/Salvage – Dismantles motor vehicles and sells the parts
  • Manufacturer/Distributor/Branch – Manufacturers or distributes new motor vehicles
  • Finance Company – Sells repossessed motor vehicles or trailers

Step 2 – Establish a Location

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

• • Office in either a building or motorhome that has space to store all business records
  • Display space large for at least 10 motor vehicles
  • Landline telephone with the phone number registered in the business’s name
  • Open a minimum of 40 hours per week, with at least 20 of those hours between 8 am and 5 pm
  • Posted business hours
  • Have a service facility or a service facility agreement with a service facility located in the dealer’s county

Step 3 – Erect a Sign

Dealers must erect a permanently affixed sign at their business location. The sign must display the business name in letters at least 8 inches high and be visible from the nearest public roadway.

Step 4 – Obtain Zoning Approval

Dealers must obtain written approval from the local zoning authority certifying that the dealer’s business location is in compliance with all applicable zoning regulations.

Step 5 – Purchase Insurance

Dealers are required to obtain liability insurance and submit a Certificate of Insurance with their application. The minimum required limits are:

• • $25,000 per person
  • $50,000 per accident
  • $25,000 property damage

Trailer-only dealers are exempt from this requirement.

Step 6 – Complete the Application

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

Nebraska Motor Vehicle Industry Licensing Board
301 Centennial Mall South
P.O. Box 94697
Lincoln, NE68509

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

• • 6.a Pictures – Dealers must submit photographs of their business location and sign with their application
  • 6.b Lease – Dealers who lease their business location must submit a copy of their lease agreement with their application. The lease agreement cannot expire before December 31 of the current year.
  • 6.c Service Agreement – Dealers who do not have a service facility at their business location must submit a Service Agreement with their application
  • 6.d Worker’s Compensation – All Nebraska businesses with employees must obtain worker’s compensation insurance and submit proof of insurance with their application. Dealers who do not have any employees can submit a Worker’s Compensation Waiver with their application.
  • 6.e Franchise Agreement – Dealers who sell new motor vehicles must submit a franchise agreement with their application that grants them express permission from a manufacturer to sell each make and model of a new motor vehicle
  • 6.f Business Registration – Dealers must register their business with the Nebraska Secretary of State which they can do here.
  • 6.g Salesperson License – All dealerships must have at least one licensed salesperson. Dealers should submit a Salesperson Application with their dealer application. There is no application fee for the Salesperson License

Step 7 – Pass Inspection

After the dealer has submitted their application, an investigator from the MVILB will contact the dealer to schedule an inspection of the dealer’s business location. If the dealer passes inspection the investigator will issue the dealer an inspection report as well as their initial application which must be mailed again to:

Nebraska Motor Vehicle Industry Licensing Board
301 Centennial Mall South
P.O. Box 94697
Lincoln, NE68509

Step 8 – Pay Fees

The following fees must be paid when applying for or renewing a dealer license in Nebraska:

• • $400 Dealer License, Auction License and Finance Company License application fee
  • $200 Wrecker/Salvage Dealer License application fee
  • $600 Manufacturer/Distributor License application fee
  • $200 Factory Branch License Application fee

Step 9 – Obtain Dealer Plates

After the dealer has received their application, they can purchase dealer plates from their local county treasurer.

Step 10 – Purchase a Surety Bond

Dealers must purchase and maintain either a $50,000 for a motor vehicle, trailer, wholesale, or motorcycle dealers, or $100,000 for auction dealers. The bond should run concurrently with the license and expire on December 31st of each year.

How Do Nebraska Auto Dealers Renew Their License?

The Nebraska Dealer License expires on December 31 of each year regardless of the date of issuance and must be renewed before the expiration date. Dealers should receive a renewal notice prior to the expiration date containing the renewal application and instructions. Dealers should mail their renewal application along with their original surety bond to the following address:

Nebraska Motor Vehicle Industry Licensing Board
301 Centennial Mall South
P.O. Box 94697
Lincoln, NE68509

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

The State of Nebraska requires dealers to obtain liability insurance with minimum limits of 25/50/25. Dealers with employees are also required to obtain worker’s compensation insurance.

How Do Nebraska Auto Dealers File Their Bond?

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

Nebraska Motor Vehicle Industry Licensing Board
301 Centennial Mall South
P.O. Box 94697
Lincoln, NE68509

Both the $100,000 and $50,000 surety bonds require signatures from both the surety company that issues the bond and the auto dealer. The bond form will require the following items:

• Legal name and location of entity/individual(s) buying the bond
• Surety company’s name and state they are located in
• Date bond will expire
• Date the bond is signed and sealed
• Notary signature for the principal

How Can Nebraska 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
• Do not substitute motor vehicles or trailers after a sale has been made
• Pay all lien and security interests
• Pay taxes on time and in full. Dealers should consider setting aside tax obligations as they accrue.
• Do not engage in any illegal selling practices

What Other Insurance Products Can Agents Offer Dealers in Nebraska?

Nebraska requires dealers to obtain liability insurance. All dealers with employees must obtain worker’s compensation insurance. Most reputable dealers should also obtain garage keeper’s 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 Nebraska Auto Dealer Customers?

Nebraska conveniently provides a public database to search for active motor vehicle dealers in the state. The database can be accessed on the Nebraska NVILB site here. Contact BondExchange for additional marketing resources. 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.