Dealer Bond

We are currently working on getting a dealer’s license in Alabama. This question is for people who currently have a dealer’s license as well as insurance professionals. We have been told that it is necessary to apply for the bond as an individual, even though the company doing business is an LLC. I always question giving out a personal social security number, which they require because they run credit. I am wondering why the credit of the company applying for the bond is not sufficient (assuming the company has a credit history - I realize that sometimes it does not.) I am not concerned that the credit will come back bad, just questioning the process.

The answer I have already received is that the insurance company then has someone to personally “go after” if they have to pay out on the bond. Doesn’t this defeat one of the purposes of forming an LLC?

We have a dealership in MS. It seems the bond companies want to make sure they’ve got themselves well covered before they will issue a bond. We spent quite a bit of time trying to find a way around this and the only other option was to just put up the cash in the form of a T-bill account and then sign it over to the state as beneficiary or to simply just deposit the cash with the state.

We thought of doing that but it seemed like a poor use of the funds. We finally decided to give our personal credit information and they ran our credit even though we are a corporation. Unfortunately you’re dealing with the government and they make the rules and the bonding companies know they’ve got the upper hand in this situation.

Ron and Gene

Raskin Mobile Home Sales & Services, Inc.