Per Section 6 of Mississippi Senate Bill 1688, Laws of 1968, all duties related to complying with state laws (i.e., registering cars or constructing homes) are borne by the Mississippi agent bond's principal (motor vehicle or manufactured home dealer). If the bond principal does not comply with state-mandated vehicle industry laws or violates their bond agreement, the surety will pay for any damages up to the bond amount. In turn, the principal must compensate the surety for any damages paid out.
As an agent of a motor vehicle dealer, you must maintain a separate surety bond for your designee capacity. This document details the requirements of the Mississippi Motor Vehicle Dealer Bond – Designated Agent. An agent is someone who sells or offers to sell motor vehicles on behalf of another person (a principal). An agent does not store inventory or have a physical location from which they sell cars; instead, agents act as intermediaries between dealers and consumers. Suppose you are an agent of a motor vehicle dealer. In that case, you will need to file a designated agent designation with the MS Department of Insurance before signing the Motor Vehicle Dealer Bond - Agent form. Once approved as a designated agent, you can complete and submit the Motor Vehicle Dealer Bond - Designated Agent form.
The amount of the Mississippi Motor Vehicle Dealer Bond is based on the total bond amount. For example, if a dealer requires $1 million in surety from an agent, the agent must post a surety bond for $1 million. The amount of the Mississippi Motor Vehicle Dealer Bond is the total amount of the bond that the Motor Vehicle Dealer must pay if they fail to fulfill the terms of their sales contract or fail to pay the customer as agreed. This amount is produced by the surety company (the entity responsible for backing the bond). Suppose the dealer or agent fails to fulfill the duties outlined in the Mississippi Motor Vehicle Dealer Bond. In that case, the Mississippi Motor Vehicle Dealer Bond is intended to help you get compensation or payment from the dealer. You will be able to collect the total amount of the bond if the dealer or agent fails to fulfill their contractual duties.
The first step is to apply for Motor Vehicle Dealer License and Dealer Bond. If you are an existing Mississippi Motor Vehicle Dealer, you must first use for an increase in your bond amount. You must submit an application for a Mississippi Motor Vehicle Dealer Bond if you are a new dealer. Once approved for the bond, you must complete and submit the Motor Vehicle Dealer Bond - Designated Agent form. This form must be accompanied by a Designated Agent Bond Agreement signed by the Motor Vehicle Dealer and you, the designated agent.
The MS Dealer Bond has no set amount but must be at least $5,000. The MS Department of Insurance may require a more significant bond based on the dealer's risk. Bond amounts can vary based on the dealer's history, type of business, inventory, etc. If you are applying for a new Mississippi Motor Vehicle Dealer Bond or your existing bond amount is less than $5,000; the Dealer Bond application must be completed and submitted with your dealer application. If you are a current Motor Vehicle Dealer whose bond amount is less than $5,000, you must file a request for an increase in your bond amount before completing the Dealer Bond application.
To act as a designated agent, you must maintain a separate surety bond for your agent capacity. The agent bond must equal the total sales contract amount for the dealer you're acting as an agent. The agent bond must be similar to the total sales contract amount for the dealer you're acting as an agent. The bond must be maintained while you are acting as an agent. You must also file a designations change form with the Mississippi Department of Insurance to inform them of the change in status.
The Mississippi Motor Vehicle Dealer Bond is an integral part of the business. While it is good to know that the Mississippi Motor Vehicle Dealer Bond is there to protect you if necessary, it is better to avoid needing it in the first place. The best way to protect yourself and your business is to ensure all terms of your sales contracts are met, and all customer payments are made appropriately and on time. By doing this, you will not only protect yourself and your business, but you will also protect the other people involved.
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