North Carolina Motor Club Bond: A Comprehensive Guide
This guide provides information for insurance agents to help their customers obtain a North Carolina Motor Club bond
At a Glance:
- Lowest Cost: $500 per year or $50 per month, based on the applicant’s credit history
- Bond Amount: $50,000
- Who Needs it: All motor clubs operating in North Carolina
- Purpose: To ensure the public will receive compensation for financial harm if the motor club commits fraud or violates any contracts with members
- Who Regulates Motor Clubs in North Carolina: The North Carolina Department of Insurance
Background
North Carolina Statute 58-69-5 requires all motor clubs operating in the state to obtain a license from the Department of Insurance. The North Carolina legislature enacted the licensing requirement to ensure that motor clubs do not act unethically. To provide financial security for the enforcement of the licensing law, motor clubs must purchase and maintain a $50,000 surety bond to be eligible for licensure.
What is the Purpose of the North Carolina Motor Club Bond?
North Carolina requires motor clubs to purchase a surety bond as part of the application process to obtain a license. The bond ensures that club members will receive compensation for financial harm if the motor club fails to abide by the regulations outlined in North Carolina Statute 58-69-10. Specifically, the bond protects the club members if the motor club engages in any acts of fraud or breaches any member contracts. In short, the bond is a type of insurance that protects club members if the motor club violates the terms of their license.
How Can an Insurance Agent Obtain a North Carolina Motor Club Surety Bond?
BondExchange makes obtaining a North Carolina Motor Club Bond easy. Simply login to your account and use our keyword search to find the “Motor Club” 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 ensures that we have the knowledge and resources to provide your clients with fast and friendly service whether obtaining quotes or issuing bonds.
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Is a Credit Check Required for the North Carolina Motor Club Bond?
Surety companies will run a credit check on the owners of the motor club to determine eligibility and pricing for the North Carolina Motor Club bond. Owners with excellent credit and work experience can expect to receive the best rates. Owners with poor credit may be declined by some surety companies or pay higher rates. The credit check is a “soft hit”, meaning that the credit check will not affect the owner’s credit.
How Much Does the North Carolina Motor Club Bond Cost?
The North Carolina Motor Club Bond can cost anywhere between $500 to $3,750 per year or $50 to $375 per month. Insurance companies determine the rate based on several factors including your customer’s credit score and experience. The chart below offers a quick reference for the cost of the $50,000 bond requirement.
$50,000 Motor Club Bond Cost
| Credit Score | Bond Cost (1 year) | Bond Cost (1 month) |
|---|---|---|
| 680+ | $500 | $50 |
| 625 – 679 | $750 | $75 |
| 575 – 624 | $1,875 | $188 |
| 550 – 574 | $2,500 | $250 |
| 500 – 549 | $3,750 | $375 |
Who is Required to Purchase the Bond?
North Carolina requires motor clubs to purchase a surety bond as a prerequisite to obtaining a license. To paraphrase North Carolina Statute 58-69-2, a motor club is an organization that provides three or more of the following services to paying members:
- Automobile Theft Reward: Provides a cash reward for persons with information pertaining to a stolen vehicle
- Bail or Cash Bond Appearance: Furnishes a cash or surety bond for members charged with a violation of motor vehicle law
- Emergency Road: Provides roadside maintenance to inoperable motor vehicles
- Legal: Pays the attorney fees for members charged with a crime related to the operation of a motor vehicle
- Map: Provides road maps at no cost
- Personal Travel and Accident Insurance: Makes available to members a personal travel or accident insurance policy
- Touring: Provides touring information at no cost
- Towing: Will move inoperable or stagnant motor vehicles from one location to another
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 Motor Clubs Apply for a License in North Carolina?
Motor Clubs in North Carolina must navigate several steps to obtain a license. Below are the general guidelines, but applicants should refer to the application checklist for details on the process.
License Period – All North Carolina Motor Club Licenses expire on June 30 of each year and must be renewed before the expiration date
Step 1 – Contact the Department of Insurance
Before applying for a license, applicants should contact the Department of Insurance. The Department will walk the club through the application process and answer any questions they may have.
Step 2 – Meet the Net Worth Requirements
North Carolina requires all motor clubs to have a positive net worth (assets – liabilities) of at least $5,000. Clubs must submit audited financial statements verifying their net worth when submitting their license applications.
Step 3 – Complete the Application
All North Carolina Motor Club License applications should be completed online here. Motor clubs must complete the application in its entirety, and submit the following items:
-
- Company formation documents
- Personal Questionnaires for all company owners and officers (not required for corporations)
- Certificate of Authority (out-of-state applicants only)
- Detailed descriptions of the applicant’s methods of operation
- Sample membership marketing materials
Applicants must mail all documents not able to be submitted, including a $648 application fee ($100 for branch locations and $200 for franchises), to the following address:
NC/State of DOI
P.O. Box 742175
Atlanta, GA 30374-2175
How do North Carolina Motor Clubs Renew Their Licenses?
All license renewal applications must be submitted online here. Motor clubs should examine the renewal checklist before submitting their applications. All North Carolina Motor Club Licenses expire on June 30 of each year and must be renewed before the expiration date.
What are the Insurance Requirements for Motor Clubs in North Carolina?
North Carolina does not require motor clubs to obtain any form of liability insurance as a prerequisite to obtaining a license. Motor clubs must purchase and maintain a $50,000 surety bond.
How Do North Carolina Motor Clubs File Their Bonds?
Motor clubs should mail their completed bond forms, including the power of attorney, to the following address:
NC Dept. of Insurance
Agent Services Division
ATTN: NIBE Team
1204 Mail Service Center
Raleigh, NC 27699-1204
The surety bond requires signatures from the surety company, a notary public that witnesses their signature, and from a representative of the motor club. The surety company should include the following information on the bond form:
- Legal name and address of the entity/individual(s) buying the bond
- Surety company’s name and state of incorporation
- Date the bond is signed
What Can North Carolina Motor Clubs do to Avoid Claims Made Against Their Bonds?
To avoid claims against their bonds, motor clubs in North Carolina must follow all license regulations in the state, including some of the most important issues below that tend to cause claims:
- Do not engage in any acts of fraud
- Do not breach any member contracts
What Other Insurance Products Can Agents Offer Motor Clubs in North Carolina?
Most reputable motor clubs will purchase liability insurance. Bonds are our only business at BondExchange, so we do not issue any other types of 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 North Carolina Motor Club Customers?
North Carolina unfortunately does not provide a public database of active motor clubs in the state. We suggest contacting the Department of Insurance to obtain this information. Contact BondExchange for additional marketing resources. Agents can also leverage our print-mail relationships for discounted mailing services.
