Upcoming Bond Amount Increase for Automobile Brokers in New York
Effective June 16, 2018, automobile brokers in New York will need to post surety bonds in a higher amount. After that date, they will also be required to obtain a license from the Division of Licensing Services at the Department of State.
Read more about the new licensing and bonding requirements.
New York Assembly Bill A6884A
Assembly bill A6884A was signed and passed in December 2017 and its provisions will become effective on June 16, 2018. The bill includes a number of amendments to sections of Article 35-B of the New York General Business Law that relate to automobile brokers in the state.
These amendments include:
- A slight expansion of the definition of “Automobile broker business” in the state
- An inclusion of a new section requiring automobile brokers to obtain a business license (certificate of registration) in order to operate in the state
- A clarification that said license does not permit brokers to act as dealers, and that individuals cannot hold a new dealer license while also being licensed as brokers
- A section specifying the need for brokers to disclose fees for auto dealers doing business with them in a visible and comprehensive manner
- A requirement for automobile brokers to post a $100,000 automobile broker bond by June 16th
- A requirement for brokers to disclose in advertisements in a visible fashion that they are not car dealers
- A prohibition to act as an automobile broker in the state without having a certificate of registration
Surety Bond Requirement and Cost
Under the new requirements, automobile brokers who until now were required to post a $75,000 bond will need to increase their bonds to $100,000 to remain compliant. While the reason for the bond amount increase was not explicitly disclosed, a common cause for raising bond amounts in any industry is to secure greater consumer protection.
Along with the licensing requirement, the new bond requirement is primarily intended to make available greater coverage for consumers who suffer losses as a result of broker malpractice. On the other hand, this increase will result in slightly greater bonding rates for automobile brokers.
For first-time applicants who are not familiar with the way surety bond cost is determined, a short explanation follows. Bond cost, also known as your bond rate, is based on the bond amount and is a fraction thereof. It is determined by the surety when you apply for your bond and is mostly based on your personal credit score. Other factors that contribute to shaping your bond rate are in the following order – your business financial statements, your personal financial statements, and your industry experience.
Based on these, the surety will offer you a rate at which you can get bonded. To find out how much your bond rate would be, complete our bond application form and we will provide you with a free and exact quote. There are no obligations attached to requesting a quote!
If you have any questions regarding the new bond requirement for automobile brokers in New York, call us at 877.514.5146!