Louisiana Revises Law Concerning Used Car Dealer Bond Claims
Since May 2018, a new Louisiana law governs the process of surety bond claims against used car dealers. House Bill 514 entered the House in March 2018 and was signed by Governor John Bel Edwards into Act 435 two months later.
According to the Act, the Louisiana Used Motor Vehicle Commission becomes the only authority that can launch a claim procedure on a Louisiana auto dealer bond for used motor vehicle dealers. With these changes, state authorities aim to streamline the claims and reimbursement processes for parties who suffer damages due to dealers’ illegal actions.
Below are the main points in the new Act, as well as background information about the way bonding works.
What Act 435 entails
According to the Act passed by Louisiana legislators, as of May 2018 the sole authority that can administer and obtain payments on surety bond claims against used car dealers is the state Used Motor Vehicle Commission. It is also the only party that has the right to launch and take action in legal cases involving such claims. The Commission is exclusively responsible for prevention of unauthorized payments on claims. It can reject bond claims if they are not seen as substantial.
Besides becoming the central authority in used car dealer bond claims, the Commission has the right to receive compensations for attorney’s fees and court costs whenever it takes part in legal actions. The dealer or their surety are responsible for the financial reimbursement.
The goal of the new law is to set a universal framework for the claims procedure against used car dealer in Louisiana. By making the Commission the central point for claims cases, lawmakers in the state strive to speed up and simplify the process for claimants who have been harmed by illegal or unethical actions committed by dealers.
The bond process and the costs
Surety bonds are required by most licensing authorities that regulate the activities of car dealers across the U.S. Auto dealer bonds function as an extra layer of guarantee for the licensing body and for the general public who may become customers of the dealerships. They are a typical licensing requirement that dealers have to meet before starting operations.
In the case of Louisiana used car dealer licensing, the required bond amount is $50,000. If you have obtained such a bond, a harmed party can file a claim against you in an amount not exceeding this penal sum. Claims can be brought in cases when dealers have transgressed from their legal obligations and thus caused damages to customers or other parties.
In order to get bonded as a Louisiana used car dealer, however, you don’t have to cover the whole bond amount of $50,000 required by the Commission. The surety bond cost is always a small percentage of the required amount. It depends on the personal and business financials of the bond applicant.
When you apply for your bond with a surety, it will have to examine factors such as your personal credit score, business finances, and any assets and liquidity you may have. The stronger these indicators are, the smaller your bond premium is likely to be.
Do you have questions about the changes to the used car dealer bond claims process in Louisiana? Don’t hesitate to get in touch with our bond experts by calling us at 877.514.5146.