Missouri Introduces License Bond Requirement for Rental Companies
A recent bill introduces a new requirement for lease and rental companies in Missouri. Businesses engaging in rental or lease of motor vehicles, trailers, boats, or outboard motors now have to post a license bond in order to be allowed to operate legally in the state.
The new rules are set in Senate Bill 368, which was signed on July 9th, 2019 by Governor Mike Parson. They come into force on August 28th, 2019. As of this date, rental and lease businesses have to provide a $100,000 Missouri rental company bond or, alternatively, an irrevocable letter of credit. The required security instrument is conditioned on the company’s compliance with applicable laws.
You can find more about the new bonding requirement in the sections below.
The stipulations in Senate Bill 368
According to the new law, lease and rental companies in Missouri now have to post a security instrument in the form of a surety bond or an irrevocable letter of credit. In order to operate in the state, you need to provide this financial security to the Department of Revenue.
The purpose of the surety bond is to protect your customers. It does not work as insurance for your business but instead is conditioned on your compliance with applicable statutes. The bond is in the name of the state of Missouri but for the benefit of any harmed party.
A person or entity who has suffered damages due to your illegal or fraudulent actions can file a claim against the bond in order to seek fair compensation. The maximum sum of the demanded reimbursement can be up to the bond amount of $100,000. Payments on bond claims can be made after the Department of Revenue receives a final judgment from a state court against the bonded licensee.
In addition to the bonding requirement, to get an operating authority as a lease or rental company, you have to pay an annual fee of $250.
According to the new bill, if you are renting or leasing more than 3,500 vehicles and have applied for an authority with the Department, you can also function as a registered fleet owner. You have to apply separately and choose between an annual and biennial license.
How to get bonded
Obtaining a surety bond is an indispensable requirement if you want to operate a lease or rental company in Missouri as of August 28th, 2019. To get bonded, you have to apply with a surety provider approved by state authorities.
The bonding process involves covering a premium, which represents a percentage of the required bond amount. It is determined on the basis of your finances, including your personal credit score, company documents, and any fixed and liquid assets.
Applicants with solid profiles usually receive rates between 0.75% and 5%. Thus, for a bond of $100,000, if your finances are in good shape, the bond premium can be between $750 and $5,000.
Do you need further information about the new Missouri rental company bond requirement? Our bonding experts can assist you – just call us at 877.514.5146.